Question

Sarah buys a car for $15,000 on January 1 using a three-year loan at 6% annual interest, compounded monthly. The loan must be paid off in equal monthly installments, paid at the end of each month. Determine her monthly payment. (Hint: Use the PMT function.)

Answer 1

$456.33

Step-by-step explanation:

Loan Amount = $15,000

Down payment = $0

Annual Rate = 6%; Monthly rate = 6%/12 = 0.50%

Years = 3; No of month = 3*12 = 36

Monthly payment = PMT(Rate, N, -Loan)

Monthly payment = PMT(0.50%, 36, -15,000)

Monthly payment = $456.3290618

Monthly payment = $456.33

Thus, her monthly payment for the loan is $456.33