Question

Marcus buys a car for $45,000. If he finances it for 5

years at an annual interest rate of 8.5%, what will his
monthly payment be?

Answer 1

M ≈ $933.24

Explanation:

To calculate Marcus's monthly payment for financing his car for 5 years at an annual interest rate of 8.5%, we can use the formula for the monthly payment on a loan:

M = P * (r/12) * (1 + r/12)^n / ((1 + r/12)^n - 1)

where:

M is the monthly payment

P is the principal (in this case, $45,000)

r is the annual interest rate (in this case, 8.5%)

n is the number of monthly payments (in this case, 5 years * 12 months/year = 60 monthly payments)

Substituting the given values, we get:

M = $45,000 * (0.085/12) * (1 + 0.085/12)^60 / ((1 + 0.085/12)^60 - 1)

Using a calculator, we get:

M ≈ $933.24

Therefore, Marcus's monthly payment for financing his car for 5 years at an annual interest rate of 8.5% is approximately $933.24.