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An engineering student wants to buy a 2005 Subaru WRX STi for $18,000. Instead of paying for the car in full immediately, the student would like to make monthly payments over two years. At a 12% annual
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An engineering student wants to buy a 2005 Subaru WRX STi for $18,000. Instead of paying for the car in full immediately, the student would like to make monthly payments over two years. At a 12% annual interest rate what would be the amount of the monthly payment

User Scalbatty
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1 Answer

3 votes

Answer:

$847.33

Step-by-step explanation:

we can use the present value of an annuity formula to calculate the monthly payment:

present value = monthly payment x PV annuity factor

monthly payment = present value / PV annuity factor

  • present value = $18,000
  • PV annuity factor, 1%, 24 periods = 21.243

monthly payment = $18,000 / 21.243 = $847.33

User CreativePS
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