Question

A car manufacturer is offering the choice of a 0.2% loan compounded monthly for 72 months or $1800 cash back on the purchase of a $20,500 new car. Completo parts (a) through (c) below.

(a) If a car buyer takes the 0.2% loan offer, how much will the monthly payment bo?
The car buyer's monthly payment will be $
(Do not round until the final answer. Then round to the nearest cont as needed.)

Answer 1

$286.5

Step-by-step explanation:

Given the following:

Principal (P) = $20,500

Period(n) = 72 months

Rate(r) = 0.2% = 0.002/12 = 0.000166666666

Monthly payment (M) =?

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

M = 20500[(0.000166666666) / (1 - (1+0.000166666666)^-72)

M=20500[(0.000166666666) / 1 - (1.000166666666^-72)

M= 20500[(0.000166666666) / 0.01192729912821

M = $20500 [ 0.01397354624952]

M = $286.457698115328

M = $286.5