Answer:
Bank one $579.98
Bank two $586.70
Step-by-step explanation:
The payment in each case can be computed using the pmt formula in excel as shown below:
=pmt(rate,nper,-pv,fv)
Bank One:
rate is the monthly rate of interest at 0.5% per month
nper is the number of months the car loan would be repaid which is 5 years multiplied by 12 months i.e 60
pv is the amount of the loan which is $30,000
fv is the future worth of the loan which is not known,hence taken as zero
=pmt(0.5%,60,-30000,0)= $579.98
Bank Two
rate is the monthly rate of interest at 0.54% per month (6.5%/12)
nper is the number of months the car loan would be repaid which is 5 years multiplied by 12 months i.e 60
pv is the amount of the loan which is $30,000
fv is the future worth of the loan which is not known,hence taken as zero
=pmt(6.5%/12,60,-30000,0)= $586.70