Question

Samantha is buying a car and needs to take out a loan for \$19,000$19,000. The bank is offering a monthly interest rate of 0.325%, for a 8 year loan. Using the formula below, determine her monthly payment, to the nearest dollar.

Answer 1

19500

Explanation:

First, convert R as a percent to r as a decimal

r = R/100

r = 0.325/100

r = 0.00325 rate per year,

Then solve the equation for A

A = P(1 + r/n)nt

A = 19,000.00(1 + 0.00325/12)(12)(8)

A = 19,000.00(1 + 0.000270833)(96)

A = $19,500.41

Rounded = 19500

Summary:

The total amount accrued, principal plus interest, with compound interest on a principal of $19,000.00 at a rate of 0.325% per year compounded 12 times per year over 8 years is $19,500.41 (19500).