Question

You are considering purchasing a new automobile that will cost you $28,000. The dealer offers you 4.9% APR financing for 60 months (with payments made at the end of the month). Assuming you finance the entire $28,000 and finance through the dealer, your monthly payments will be closest to:____________
A) $1454
B) $527
C) $467
D) $457

Answer 1

Answer:

so correct option is B) $527

Explanation:

given data

cost = $28,000

offer APR = 4.9 % = $\frac{4.9}{12}$ = 0.0041

time = 60 months

finance the entire = $28,000

solution

we will apply here formula for calculate monthly payment  that is

= $\frac{r(1+r)^t}{(1+r)^t -1}$    ...........1

here r is rate that is 0.0041 and t is time that is 60 put here value we get

=  $\frac{0.0041(1+0.0041)^{60}}{(1+0.0041)^{60} -1}$

= 0.01883

so monthly payment is = 28000 × 0.01883

monthly payment is $527

so correct option is B) $527

Answer 2

Answer:

Correct option is (B)

Explanation:

Given:

Cost of automobile (PV) = $28,000

APR = 4.9% or 0.049

Monthly interest rate = 0.049÷12

                                   = 0.0041

Time period (nper) = 60

Use spreadsheet function =pmt(rate,nper,-PV) to compute monthly payment.

Monthly payment is $527.37 or $527.

PV is negative as it is a cash outflow.