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14 February, 11:52

She negotiated a price of $21,900 and will trade in her old car for $2,350. She will put another $850 with it and borrow the remainder at 6% interest compounded monthy for 4 years. What will her monthy payment be?

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  1. 14 February, 13:19
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    The monthly payment will be $434

    Explanation:

    Price of New car = $21,900

    Price of old car exchanged = $2,350

    Cash Payment = $850

    Amount of Loan = $21,900 - $2,350 - $850

    Amount of Loan = A = $18,700

    Rate of interest = r = 6% = 0.06 = 0.005 per month

    Number of total periods = 12 x 4 = 48

    P = $18500 / { [ (1 + 0.005) ^48 ] - 1 } / [ 0.005 (1 + 0.005) ^48 ]

    P = $18500 / [ 0.2704891611 / 0.006352446 ]

    P = $18500 / 42.58

    P = $434.47
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