Question

Need to borrow $45000 to buy a car. bank will charge 9% interest per year compounded monthly.

a) what is the monthly payment if it takes 6 years to pay off?

Answer 1

approximately $737.88.

Explanation:

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

Where:

M = Monthly payment

P = Principal amount (loan amount)

r = Monthly interest rate

n = Total number of payments (number of months)

Monthly interest rate = 9% / 12 = 0.09 / 12 = 0.0075

Total number of payments = 6 years * 12 months/year = 72 months

M = 45000 * (0.0075 * (1 + 0.0075)^72) / ((1 + 0.0075)^72 - 1)

M ≈ $737.88 (rounded to the nearest cent)