Question

You borrow $6,730 to buy a car. the terms of the loan call for monthly payments for 5 years a rate of interest of 6 percent. what is the amount of each payment?

Answer 1

Loan amount, P=6730
interest, i = 0.06/12 = 0.005 per month
term, n=5 years = 60 months

Monthly payment,
A=
`(P(i*(1+i)^n))/((1+i)^n-1)`

`=(6730(.005*(1+.005)^(60)))/((1+.005)^(60)-1)`
=130.11 [to the nearest cent]