She negotiated a price of $21,900 and will trade in her old car for $2,350. She will put another $850 with it and borrow the remainder at 6% interest compounded monthy for 4 years. What will her monthy payment be?

Question

Business

Mccall

3 May, 07:48

She negotiated a price of $21,900 and will trade in her old car for $2,350. She will put another $850 with it and borrow the remainder at 6% interest compounded monthy for 4 years. What will her monthy payment be?

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Answers (1)

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Irene · Answer 1

The monthly payment will be $434

Explanation:

Price of New car = $21,900

Price of old car exchanged = $2,350

Cash Payment = $850

Amount of Loan = $21,900 - $2,350 - $850

Amount of Loan = A = $18,700

Rate of interest = r = 6% = 0.06 = 0.005 per month

Number of total periods = 12 x 4 = 48

P = $18500 / { [ (1 + 0.005) ^48 ] - 1 } / [ 0.005 (1 + 0.005) ^48 ]

P = $18500 / [ 0.2704891611 / 0.006352446 ]

P = $18500 / 42.58

P = $434.47