Teresa is buying a car for $23,550. She will finance $19,600 of it with a 2-year loan at 2.7% APR. What will her monthly auto payment be?

Question

Mathematics

Elena Browning

2 May, 14:19

Teresa is buying a car for $23,550. She will finance $19,600 of it with a 2-year loan at 2.7% APR. What will her monthly auto payment be?

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Micaela Francis · Answer 1

Present value of annuity = 12P (1 - (1 + r/12) ^-12n) / r

19,600 = 12P (1 - (1 + 0.027/12) ^ - (2 x 12)) / 0.027

0.027 x 19600 = 12P (1 - (1 + 0.00225) ^-24)

529.2 = 12P (1 - (1.00225) ^-24)

12P = 529.2 / (1 - 0.9475) = 529.2 / 0.0525

P = 10,077.9995 / 12 = $839.83

Therefore, her monthly payment = $839.83