12.0k views
2 votes
Andrea is buying a car for $21,450 she will finance $16,450 of it with a 5 year loan at 2.9% apr what will her monthly auto payment be?

a.$294.85b)$363.38c) 477.66d)$706.32

2 Answers

1 vote
the monthly payment is A. $294.85
User Csturtz
by
8.1k points
4 votes

Answer:

The monthly payment is $294.85.

Explanation:

Given : Andrea is buying a car for $21,450 she will finance $16,450 of it with a 5 year loan at 2.9% APR.

To find : What will her monthly auto payment be?

Solution :

Formula of monthly payment

Monthly payment,
M=\frac{\text{Amount}}{\text{Discount factor}}

Discount factor
D=(1-(1+i)^(-n))/(i)

Where, Amount = $16,450

Rate r= 2.9%=0.029


i=(0.029)/(12)=0.002416

Time = 5 years


n=5*12=60

Now, put all the values we get,


D=(1-(1+i)^(-n))/(i)


D=(1-(1+0.002416)^(-60))/(0.002416)


D=(1-(1.002416)^(-60))/(0.002416)


D=(1-0.865)/(0.002416)


D=(0.135)/(0.002416)


D=55.87

Monthly payment,
M=\frac{\text{Amount}}{\text{Discount factor}}


M=(16450)/(55.87)


M=294.85

Therefore, Option A is correct.

The monthly payment is $294.85.

User John Gowers
by
7.8k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.