Question

You want to buy a $25,000 car. The company is offering a 4.6% annual interest rate, compounded monthly, for 4 years (48 months). What will your monthly payments be? (Enter numeric answers to 2 decimal places.)

Answer 1

$571.21

Explanation:

You want to know the monthly payment on a 48-month loan of $25,000 at 4.6% APR.

Payment

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

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

where P is the loan amount at annual rate r, and there are n monthly payments.

A = 25000(.046/12)/(1 -(1 +.046/12)^-48) ≈ 571.21

The monthly payments will be $571.21.

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