Question

You want to buy a car that costs $21,500 with a $500 down payment. how much will your payments be per month if you have a 5% loan for 4 years and your first payment is due when you pick up the car? ( solve in excel or with a financial calculator and answer to two decimal places. remember to make adjustments for period length. )

Answer 1

The monthly payment for a $21,500 car with a $500 down payment, 5% annual interest rate, and a 4-year loan term is $483.32.

Step-by-step explanation:

The monthly payments for a car costing $21,500 with a $500 down payment, a 5% loan, and a term of 4 years (48 months) can be calculated using a financial calculator or an Excel function. Given that the down payment is subtracted from the total cost, the amount financed would be $21,000.

To calculate the monthly payment, you can use the PMT function in Excel: =PMT(rate/nper, nper*years, -PV) rate is the annual interest rate (5% or 0.05 in this case) nper is the number of payments per year (assume 12 for monthly payments) years is the term of the loan in years (4 years) PV is the present value or the amount of the loan ($21,000) This calculation yields the monthly payment amount that would need to be made to pay off the car loan over 4 years accounting for the 5% annual interest rate.