Question

You take out a loan to finance the purchase of a $10,000 vehicle. The annual interest rate is 3.2%, and you plan to repay the loan in eighteen payments. Use the amortization formula to compute the amount you should send to the financial institution each time you make a payment.

Answer 1

To compute the amount you should send to the financial institution each time you make a payment, you can use the amortization formula.

Step-by-step explanation:

To compute the amount you should send to the financial institution each time you make a payment, you can use the amortization formula. The formula is:

Payment Amount = Loan Amount / ((1 - (1 + interest rate) ^ -number of payments))

Substituting the given values into the formula:

Payment Amount = $10,000 / ((1 - (1 + 0.032) ^ -18))

Calculating this equation will give you the amount you should send to the financial institution each time you make a payment.