Question

Tracy purchased a car for $19,500. She is financing the purchase at an 11% annual interest rate, compounded monthly for 3 years. What is the payment that Tracy is required to make at the end of each month

Answer 1

Based on the cost of the car and the interest rate, the amount Tracy is to pay is $638.41.

How much should Tracy pay?

The cost of the car is the present value of an annuity because Tracy's payment will be constant.

First find the monthly rate:

= 11% / 12 months

= 0.92%

The number of periods:

= 3 x 12 months

= 36 months

Amount to be paid is:

19,500 = Amount x (1 - ( 1 + 0.92%) ⁻³⁶) / 0.92%

Amount = 19,500 / 30.544874328

= $638.41

Find out more on the present value of an annuity at brainly.com/question/25792915.

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