Question

Duane decided to purchase a $31,000 MSRP vehicle at a 5.5% interest rate for

5 years. The dealership offered him a $4500 cash-back incentive, which he
accepted. Taking all these factors into consideration, what monthly payment
amount can he expect?

A. $592.14

B. $517.39

C. $506.18

D. $442.28

Answer 1

(C)
`\$506.18`

Explanation:

Manufacturer's Suggested Retail Price = $31,000

CashBack = $4500

Amount Financed = $31,000-4500 =$26500

Interest rate Per Annum =5.5%

Rate Per Period (Monthly), r
`=(5.5)/(12)\%=(0.055)/(12)`

Time =5 Years

Number of Periods, n=5 X 12=60 Months

`Monthly \:Payment=(rP)/(1-(1+r)^(-n))`

`=((0.055)/(12)*26500)/(1-(1+(0.055)/(12))^(-60))\\=\$506.18`