Question

• capital one is advertising a 60-month, 5.99% apr motorcycle loan. if you need to borrow $8000 to purchase your dream harley davidson, what will your monthly payment be?

Answer 1

Given:
P = $8000, the principal
r = 5.99% = 0.0599, the interest rate
t = 60 months = 5 years, the duration
Assume n = 12, monthly compounding.

n*t = 12*5 = 60
r/n = 0.0599/12 = 0.004992

The total value of the loan is
A = P(1 + r/n)⁶⁰
= 8000(1.004992)⁶⁰
= 10785.434

Monthly payment = 10785.434/60 = $179.76

Answer: $179.46

Answer 2

The monthly payment is $ 154.29

Explanation:

Given : time period = 60 months

Annual interest rate = 5.99%

Amount to be borrowed = $8000

We have to calculate the monthly payment.

We know ,

`P=(A\cdot (i)/(12))/(1-(1+(i)/(12))^(-n))`

We have,

interest rate = 5.99% = 0.0599

Amount = $8000

time period = 60 months

P is monthly payment.

`P=(8000\left((0.059)/(12)\right))/(1-\left(1+(0.059)/(12)\right)^(\left(-60\right)))`

Simplify, we get,

P = 154.29

Thus, the monthly payment is $ 154.29