You are considering purchasing a new truck that will cost you $34,000. The dealer offers you 1.9% APR within monthly compounding for 48 months (with payments made at the end of the month). Assuming you finance the entire $34,000 and finance through the dealer, your monthly payments will be closest to:

Answer: $31,513.65

my monthly payment (principal) would be closest to $31,514

Explanation:

Using compound interest formula below to find the principal

A = p (1 + r/n) ^nt

A = amount = $34,000

r = annual nominal rate = 1.9% = 0.019

n = number of compounding; monthly compounding means 12 interest payments in a year

P = principal

t = time in years 48months = 48/12years = 4years

34,000 = p (1 + 0.019/12) ^12 (4)

34,000 = p (1 + 0.00158333333) ^48

34,000 = p (1.00158333333) ^48

34,000 = 1.07889755p

Divide both sides by 1.07889755

P = $31,513.6502

≈$31,514 to nearest whole number.