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Elin purchased a used car for $10,000. She wrote a check for $2,000 as a down payment for the car and financed the $8,000 balance. The annual percentage rate FE PRACTICE PROBLEMS 235 (APR) is 9% compounded monthly, and the loan is to be repaid in equal monthly installments over the next four years. Which of the following is most near to Elin’s monthly car payment?

Respuesta :

Answer:

Therefore, the correct monthly car payment for Elin is most near to $184.

Step-by-step explanation:

Given:

   Loan amount (P) = $8,000

   Annual Percentage Rate (APR) = 9%

   Loan term = 4 years

Step 1: Calculate the monthly interest rate (c)

c = APR / 12 = 9% / 12 = 0.0075 or 0.75% per month

Step 2: Calculate the number of payments (n)

n = 4 years * 12 months/year = 48 months

Step 3: Calculate the monthly payment

Monthly Payment = P * [c(1+c)^n]/[(1+c)^n-1]

Monthly Payment = $8,000 * [0.0075(1+0.0075)^48]/[(1+0.0075)^48-1]

Monthly Payment = $183.64

Therefore, the correct monthly car payment for Elin is most near to $184.

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