Question

You obtain a 5 -year car loan with an initial balance of $40,000. The loan has an APR of 6% with monthly payments. How much is the monthly car payment assuming the first is due one month from today? $773.31 $79132 $949.59 $706.67

Answer 1

Answer: the correct answer is $773.31.

Step-by-step explanation:

To calculate the monthly car payment, we can use the formula for calculating the monthly payment on a car loan:

M = P * (r(1+r)^n) / ((1+r)^n-1)

Where:

M = Monthly payment

P = Loan amount (initial balance)

r = Monthly interest rate (APR / 12)

n = Number of monthly payments (5 years * 12 months per year)

Given:

Loan amount (P) = $40,000

APR = 6%

Number of monthly payments (n) = 5 years * 12 months per year = 60 months

Let's calculate the monthly payment:

r = 6% / 12 = 0.005 (decimal)

M = 40000 * (0.005(1+0.005)^60) / ((1+0.005)^60-1)

Using a calculator, the monthly payment (M) comes out to be approximately $773.31.