Caleb bought a car for $6,900. he agreed on a five - year loan at a 5.4% interest rate. calculate what caleb's monthly payments will be.

Monthly payment amount is given by;

P = A*D - - - A = Amount borrowed = $6,900, D = factor

That is,

D = [R/12]/[1 - (1+R/12) ^-12n] - - - where R = 5.4% = 0.054, n = 5 years

Substituting;

D = [0.054/12]/[1 - (1+0.054/12) ^-12*5] = 0.0191

Therefore, monthly payment amount P is;

P = A*D = 6900*0.0191 = $131.48