Question

The BMW 650i Cabriolet has a MSRP of $116,000 (including all dealership fees). BMW Financial Services offers a loan at 2% per annum. The price of the car, with sales tax, is $131,080. You choose monthly payments over 5 years (60 payments). What are the monthly loan payments?

Answer 1

To calculate the monthly loan payments for a BMW 650i Cabriolet at a 2% annual interest rate over 5 years, we use a fixed installment loan formula, which results in an estimated monthly payment of approximately $2,300.93.

Step-by-step explanation:

To calculate the monthly loan payments for a BMW 650i Cabriolet with a loan amount of $131,080 at a 2% annual interest rate over 5 years, we will use the formula for fixed installment loans. The formula is:

M = P [i(1 + i)^n] / [(1 + i)^n – 1]

Where:

• M is the monthly payment
• P is the loan principal ($131,080)
• i is the monthly interest rate (annual rate / 12)
• n is the total number of payments (60)

Using the provided figures:

• P = $131,080
• i = 2% per annum / 12 months = 0.002 (0.16% per month)
• n = 60

Putting these into the formula:

M = 131,080 [0.002(1 + 0.002)^60] / [(1 + 0.002)^60 - 1]

After calculating, we find that the monthly payment will be approximately $2,300.93.