Question

• capital one is advertising a 60-month, 5.99% apr motorcycle loan. if you need to borrow $8000 to purchase your dream harley davidson, what will your monthly payment be?

Answer 1

Answer:

The monthly payment  is $ 154.29

Step-by-step explanation:

Given : time period = 60 months

Annual interest rate = 5.99%

Amount to be borrowed = $8000

We have to calculate the monthly payment.

We know ,

$P=\dfrac{A\cdot \frac{i}{12}}{1-(1+\frac{i}{12})^{-n}}$

We have,

interest rate = 5.99% = 0.0599

Amount = $8000

time period = 60 months

P is monthly payment.

$P=\dfrac{8000\left(\frac{0.059}{12}\right)}{1-\left(1+\frac{0.059}{12}\right)^{\left(-60\right)}}$

Simplify, we get,

P = 154.29

Thus, the monthly payment  is $ 154.29

Answer 2

Given:
P = $8000, the principal
r = 5.99% = 0.0599, the interest rate
t = 60 months = 5 years, the duration
Assume n = 12, monthly compounding.

n*t = 12*5 = 60
r/n = 0.0599/12 = 0.004992

The total value of the loan is
A = P(1 + r/n)⁶⁰
    = 8000(1.004992)⁶⁰
    = 10785.434

Monthly payment = 10785.434/60 = $179.76

Answer: $179.46