Question

Determine the monthly payment for a new truck that costs $40, 000 if the buyer will make a down payment of $5, 000. The term of the loan are 4.5% APR for 48 months

Answer 1

$798.12

Explanation:

You want the monthly payment on a 48-month loan of $35,000 at 4.5% APR.

Payment

After the down payment, the amount that needs to be borrowed is ...

$40,000 -5,000 = $35,000

The amount of the monthly payment is given by the formula ...

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

where P is the principal loan amount, r is the APR, and n is the number of months.

Using the given values, we find the payment amount to be ...

A = $35000(0.045/12)/(1 -(1 +0.045/12)^-48) ≈ $798.12

The monthly payment on the truck is $798.12.

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