Suppose you want to buy a car. Sale price of the car is $18,427. You can afford to make a down payment of $3,427. The net amount to be financed is $15,000. If the dealer offers 6 year at 6.25% APR (compound monthly), what would the monthly payment be? Choose the one closest to the answer.

Question

Business

Lynn

26 February, 00:43

Suppose you want to buy a car. Sale price of the car is $18,427. You can afford to make a down payment of $3,427. The net amount to be financed is $15,000. If the dealer offers 6 year at 6.25% APR (compound monthly), what would the monthly payment be? Choose the one closest to the answer.

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Answers (1)

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Theresa Acevedo · Answer 1

Monthly payment would be $250.37

Explanation:

The monthly payment can be determined using excel pmt formula as follows:

=pmt (rate, nper,-pv, fv)

rate is the APR of 6.25% per year divided by 12 months in a year

nper is the number of years the payments would last which is 6 years multiplied by 12 months

pv is the initial amount of finance which is the net amount of $15,000

fv is the total amounts to be repaid which is unknown

=pmt (6.25%/12,6*12,-15000,0) = $ 250.37

The amount of monthly payment is $250.37