Question

A Chevrolet Sonic Hatchback costs $14,465.00. With a 12% down payment, you can have an amortized loan for 5 years at a rate of 3.5%.

A) What will the monthly payment be?

Answer 1

The monthly payment for the amortized loan will be approximately $227.02.

Step-by-step explanation:

To calculate the monthly payment on an amortized loan, you can use the formula:

Monthly Payment = [P * R * (1+R)^N] / [(1+R)^N-1]

• P = Principal amount of the loan, which is $14,465.00 minus the down payment (12% of $14,465.00)
• R = Monthly interest rate, which is the annual interest rate divided by 12 (3.5% / 12)
• N = Number of monthly payments, which is 5 years multiplied by 12 months

Using these values:

Principal (P) = $14,465.00 - ($14,465.00 * 0.12) = $12,720.80

Monthly Interest Rate (R) = 3.5% / 12 = 0.002917

Number of Monthly Payments (N) = 5 years * 12 months = 60 months

Substituting the values into the formula:

Monthly Payment = [12,720.80 * 0.002917 * (1 + 0.002917)^60] / [(1 + 0.002917)^60 - 1]

Monthly Payment ≈ $227.02