Question

Question 3

Mr. Winking is purchasing a car and needs to finance $24,000 from the bank with an annual percentage rate (APR) of
4.8%. He is financing it over 5 years and making monthly payments. What is the monthly payment?
$104.54
$378.21
$450.71
$1225.56

Answer 1

The monthly payment, PMT = $450.71

Therefore the correct option is C.) $450.71

Explanation:

i) Value of Loan, or Present value, PV = 24000

ii) Annual percentage rate , APR = 0.048

iii) number of periods, n = 12

iv) periodic interest, R = APR / n = 0.048 / 12 = 0.004

v) number of years, t = 5

v) Monthly Payment, PMT =
`(PV* R)/(1 - (1 + R)^((-1* n * t))) = (24000 * 0.004)/(1 - ( 1 + 0.004)^(-60))` = $450.71