Question

Ashley is buying a car and needs to take out a loan for \$16,500$16,500. The bank is offering an annual interest rate of 6.3%, compounded monthly, for a 6 year loan. Using the formula below, determine her monthly payment, to the nearest dollar.

Answer 1

24056

Explanation:

First, convert R as a percent to r as a decimal

r = R/100

r = 6.3/100

r = 0.063 rate per year,

Then solve the equation for A

A = P(1 + r/n)nt

A = 16,500.00(1 + 0.063/12)(12)(6)

A = 16,500.00(1 + 0.00525)(72)

A = $24,055.69

Rounded = 24056

Summary:

The total amount accrued, principal plus interest, with compound interest on a principal of $16,500.00 at a rate of 6.3% per year compounded 12 times per year over 6 years is $24,055.69.