Gerritt wants to buy a car that costs $30,000. The interest rate on his loan is 5.59 percent compounded monthly and the loan is for 7 years. What are his monthly payments

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Dominique Dalton

13 December, 02:05

Gerritt wants to buy a car that costs $30,000. The interest rate on his loan is 5.59 percent compounded monthly and the loan is for 7 years. What are his monthly payments

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Liana · Answer 1

Using the formula to calculate the monthly payment: (rate*Present Value) / (1 - (1+rate) ^ (-period). You can use excel to do the calculations with the function: PMT (rate; period; present value)

The amount will be US$ 1,694.57.

To do the calculation you have to remind that the rate must be in the same period, that means that if the interest is in a monthly period the period must be monthly too. In this case the period have to be 84 months (which is 7 years).