Question

Amy bought a new car for $35,000. She paid a 10% down payment and financed the remaining balance for 60 months with an APR of 5.5%. Determine the monthly payment that Amy pays. Round your answer to the nearest penny (cent).

O $583.33
O $668.54
O $601.69
O $525.00

Answer 1

Amy's monthly car payment, after a 10% down payment on a $35,000 car and financing the remaining balance with a 5.5% APR for 60 months, is calculated to be $601.69.

Step-by-step explanation:

To determine Amy's monthly car payment, we first need to calculate the amount financed after her down payment. A 10% down payment on a $35,000 car is $3,500, which means she finances $35,000 - $3,500 = $31,500. The loan term is 60 months, and the APR is 5.5%.

Using the loan formula or an amortization calculator, the calculation for the monthly payment with an annual percentage rate (APR) convertible monthly is as follows:

Monthly Payment = P[r(1+r)^n]/[(1+r)^n-1]

Where:

• P = principal amount ($31,500)
• r = monthly interest rate (APR/12/100 = 5.5%/12/100 = 0.00458333)
• n = number of payments (60)

Plugging the values in, we can calculate the monthly payment. After doing the math, we find that the monthly payment, rounded to the nearest penny, is $601.69.