Question

You decide to buy a car with a base price of $11,499 at an interest rate of 6.2%. The car will be compounded monthly in those 5 years. What will your monthly payment be? Round the money to the nearest hundredth

Answer 1

A = $15,696.72

Explanation:

Use the compound amount formula: A = P(1 + r/n)^(nt). Here the number of compounding periods is nt, or (12 per year)(5 years) = 60.

Our formula becomes A = $11,499(1 + 0.062/12)^60, which works out to:

A = $11,499(1 + 0.0052)^60, or

A = $15,696.72

The monthly payment is $15,696.72/60, or $261.61.