Question

determine the monthly payment for a car that cost $42,100 if you put $4000 down and traded in a car for $6500 on a 5 year loan with 4.5% interest rate

Answer 1

Answer: $589.12

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Step-by-step explanation:

The down payment and trade-in value add to 4000+6500 = 10,500

Subtract this total from the car's cost

42,100 - 10,500 = 31,600

This is the amount loaned to the customer.

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We have these input values

• L = 31,600 = loan amount
• i = 0.045/12 = 0.00375 = monthly interest rate in decimal form
• n = 12*5 = 60 months (equivalent to 5 years)

Let's compute the monthly payment

P = (L*i)/(1 - (1+i)^(-n))

P = (31600*0.00375)/(1 - (1+0.00375)^(-60))

P = 589.119408031938 approximately

P = 589.12