Question

Andrea is buying a car for $21,450 she will finance $16,450 of it with a 5 year loan at 2.9% apr what will her monthly auto payment be?
a.$294.85b)$363.38c) 477.66d)$706.32

Answer 1

The monthly payment is A. $294.85

Answer 2

Answer:

The monthly payment is $294.85.

Step-by-step explanation:

Given : Andrea is buying a car for $21,450 she will finance $16,450 of it with a 5 year loan at 2.9% APR.  

To find : What will her monthly auto payment be?

Solution :

Formula of monthly payment

Monthly payment, $M=\frac{\text{Amount}}{\text{Discount factor}}$

Discount factor $D=\frac{1-(1+i)^{-n}}{i}$

Where, Amount = $16,450

Rate r= 2.9%=0.029

$i=\frac{0.029}{12}=0.002416$

Time = 5 years  

$n=5\times12=60$

Now, put all the values we get,

$D=\frac{1-(1+i)^{-n}}{i}$

$D=\frac{1-(1+0.002416)^{-60}}{0.002416}$

$D=\frac{1-(1.002416)^{-60}}{0.002416}$

$D=\frac{1-0.865}{0.002416}$

$D=\frac{0.135}{0.002416}$

$D=55.87$

Monthly payment, $M=\frac{\text{Amount}}{\text{Discount factor}}$

$M=\frac{16450}{55.87}$

$M=294.85$

Therefore, Option A is correct.

The monthly payment is $294.85.