Question

Phil purchased a car today at a price of $8,500. He paid $300 down in cash and financed the balance for 36 months at 5.75 percent, compounded monthly. What is the amount of each monthly loan payment

Answer 1

Answer:

$\large\boxed{\large\boxed{\ 248.53}}$

Explanation:

The equation to calculate the monthly payment for fixed-rate loans is:

     $Monthly\text{ }payment=Loan\times \bigg[\dfrac{r(1+r)^t}{(1+r)^t-1}\bigg]$

Where:

• Loan = $8500 - $300 = 8,200

• r is the monthly interest = 5.75% / 12 = 0.0575/12 ≈ 0.00479

• t is the number of moths = 36

Substituting:

$Monthly\text{ }payment=\ 8,200\times \bigg[\dfrac{(0.0575/12)(1+(0.0575/12))^{36}}{(1+(0.0575/12))^{36}-1}\bigg]=\ 248.53$