You want to buy a new sports coupe for $75,200, and the finance office at the dealership has quoted you a loan with an APR of 7.
6 percent for 48 months to buy the car.
Requirement 1: What will your monthly payments be? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Monthly payment $ ?
Requirement 2:
What is the effective annual rate on this loan? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)
Effective annual rate % ?
Requirement 1: What will your monthly payments be? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Monthly payment $ ?
Requirement 2:
What is the effective annual rate on this loan? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)
Effective annual rate % ?
1 answer:
Answer:
1. $1,821.76
2. 7.87%
Explanation:
We use the PMT formula that is shown in the attachment below:
Provided that
Present value = $75,200
Future value = $0
Rate of interest = 7.6% ÷ 2 = 0.6333333%
NPER = 48 months
The formula is shown below:
= PMT(Rate;NPER;-PV;FV;type)
The present value come in negative
So, after solving this, the monthly payment is $1,821.76
2. Now the effective annual rate is
= (1 + APR ÷ number of months)^number of months - 1
= (1 + 7.6% ÷ 12)^12 - 1
= 7.87%
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