Final answer:
To calculate the monthly car loan payment, one must use the PMT function with the rate (5.62%/12), number of payments (48), present value (-$19,635), future value (0), and type (0 or omitted). The correct PMT formula, in this case, would be PMT(5.62%/12, 48, -19635, 0).
Step-by-step explanation:
To calculate the monthly car loan payment (PMT) for buying a car, you first need to understand the variables involved in the PMT function. The price of the car is $27,635, and you have an $8,000 down payment, which means you need to finance $27,635 - $8,000 = $19,635. The annual interest rate is 5.62%, but since the rate is compounded monthly, you'll need to divide this by 12 to get the monthly interest rate. Also, the term of the loan is four years or 48 months.
Using the PMT function in spreadsheet software, the inputs would be the rate (interest rate per period, which is 5.62% / 12 months), nper (total number of periods, which is 4 years × 12 months/year = 48 months), pv (present value or amount of the loan, which is $19,635), and fv (future value, which we can set to 0, as the loan balance should be 0 after the last payment). Since payments are made at the end of each period, the type is assumed to be 0 (or omitted as 0 is the default).
The formula for the PMT function would then be: PMT(rate, nper, pv, fv, type), which translates to: PMT(5.62%/12, 48, -19635, 0). Remember to make the present value (amount of the loan) a negative number to represent money being borrowed.