Caleb bought a car for $6,900. He agreed on a five-year loan at a 5.4% interest rate. Calculate what Caleb's monthly payments will be.

P = AD,

P = Monthly payment

A = Cost of the car

D = [R/12]/[1 - (1+R/12) ^-12n], where R = Annual interest = 5.4% = 0.054, n = Number years = 5

Therefore,

D = [0.054/12]/[1 - (1+0.054/12) ^-12*5] = 0.019055

And,

P = 6,900*0.019055 = $131.48

Monthly payment will be $131.48.