Question

Closing: Wanda wants to buy a new car for

$34,650. The bank will give her a car loan
for five years at 4.5% APR with $0 down
payment. What will her monthly payment be?
Variable
N
1%
PV
PMT
FV
P/Y
C/Y
Definition of Variable
number of compounding periods
annual interest rate
principal, or present value
amount of each regular payment
future value
number of payments per year
number of compounding periods per year
Value in Wanda's
Loan Situation

Answer 1

Wanda's monthly car loan payment, with a $34,650 loan amount, 4.5% APR for five years (60 months), is approximately $651.22, calculated using the loan payment formula.

To calculate Wanda's monthly car loan payment, you can use the loan payment formula. The formula for calculating a loan payment is:

`\[ PMT = (PV * \left( (r(1 + r)^n)/((1 + r)^n - 1) \right))/(n) \]`

Where:

-
`\( PMT \)` is the monthly payment,

-
`\( PV \)` is the present value or loan amount,

-
`\( r \)` is the monthly interest rate (annual rate divided by 12 and converted to a decimal),

-
`\( n \)` is the total number of payments (number of years multiplied by the number of payments per year).

In this case, Wanda's loan situation has the following values:

-
`\( PV \)` (present value or loan amount) = $34,650

-
`\( r \)` (monthly interest rate) =
`\( (1\%)/(12) \)` or 0.045 (4.5% APR converted to decimal and divided by 12)

-
`\( n \)` (total number of payments) = 5 years
`\(*\)` 12 months per year = 60 payments

Now, plug these values into the formula:

`\[ PMT = (34650 * \left( (0.045(1 + 0.045)^(60))/((1 + 0.045)^(60) - 1) \right))/(12) \]`

Calculating this expression will give you Wanda's monthly car loan payment. Using a calculator or a spreadsheet software is recommended for such computations.