Question

Millie decided to purchase a $17,000 MSRP vehicle at a 4% interest rate for 6 years. The dealership offered her a $2700 cash-back incentive, which she accepted. If she takes all these factors into consideration, what monthly payment amount can she expect?
A.$223.73

B.$243.25

C.$274.61

D.$235.51

Answer 1

Answer:

Monthly Payment Amount for Millie = $223.73

Step-by-step explanation:

MSRP of the vehicle = $17000

Cashback offered by the dealer = $2700

Net MSRP of the vehicle = 17000 - 2700 = $14300

Now, Principal = $14300

Annual Rate  = 0.04

$\implies\text{Monthly rate, r = }\frac{0.04}{12}\approx 0.0033}$

Time, n = 6 years = 72 months

$\text{Monthly Payment = }\frac{r\times Principal}{1-(1+rate)^{-n}}\\\\\text{Monthly Payment = }\frac{0.0033\times 14300}{1-(1+0.0033)^{-72}}\\\\\bf\implies\textbf{Monthly Payment = }\ 223.73$

Hence, Monthly Payment Amount for Millie = $223.73

So, Option A. is correct.