Question

Jackie wants to buy a $25,000 car, but she can afford to pay only $400 per month for 5 years. If the interest rate is 8.25% compounded monthly, how much does she need to put down?

Answer 1

A down payment of $5,388.50 to get the principle to $19611.50 for a monthly payment of $400 for 60 months at 8.25%

Explanation:

I used a payment calculator

I don't know how else to solve the problem. I thought I could find the equation, but I don't think this is it, since P didn't equal 19611.50

A = P[r(1+r)n] / [(1+r)n - 1]

if you have the correct formula follow this process

A = 400 P principle ??? r = i%/12 = 0.0825/12 = 0.006875 n= 5×12 = 60

solve for P then down payment = 25000 - P

P = A / [r(1+r)n] / [(1+r)n - 1]

= A [(1+r)n - 1] / [r(1+r)n]

= 400 [(1 +.006875)60 -1] / [0.006875( 1 +0.006875)60]