Final answer:
The monthly payment for a $14,000 car at a 5% interest rate for 36 months would be approximately $419.43. This figure is calculated using the Amortizing Loan Equation with the loan amount, interest rate, and loan term.
Step-by-step explanation:
The monthly payment for a $14,000 car loan at a 5% interest rate for 36 months will be approximately $419.43.
To calculate the monthly payment for a car loan, we can use the Amortizing Loan Equation. The loan amount (principal), the interest rate, and the number of periods (months) are required for the calculation. The formula for an amortizing loan payment is:
P = [Pv*i*(1+i)^n]/[(1+i)^n-1]
Where P is the monthly payment, Pv is the loan principal, i is the monthly interest rate, and n is the number of payments. In this case:
- Principal (Pv) = $14,000 (loan amount)
- Monthly interest rate (i) = 5% annual interest rate / 12 months = 0.004167
- Number of payments (n) = 36 (3 years)
Plugging these into the formula provides us with a monthly payment calculation. By following the steps of the formula, you would find that the payment is approximately $419.43.
This calculation assumes a fixed interest rate over the duration of the loan and does not take into account any potential fees or penalties that could alter the payment amount.