Question

Victor will borrow $6800 at 13.5% APR. He will pay it back over 3 years. What will his monthly payment be?

Table: 3.394

Answer 1

The answer is 230.79

Answer 2

Here we are to calculate the monthly payment. In other words, the annuity payments

The formula to use is the present value of the annuity which is give by PVA = P *(1-(1+r)^-n)/r

r = monthly interest rate = 13.5/12 = 1.125% or 0.0125

n = 3 years = 36 months = 36

P (Monthly payment) = ? (To calculate)

PVA = 6,800

Substituting in the above formula we het

6,800 = P*(1-(1+0.0125)^-36)/0.0125

6,800 = P*28.84726737

P = 6,800/28.84726737

P = $235.72

Monthly payment = $235.72