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9 August, 21:51

Teresa is buying a car for $23,550. She will finance $19,600 of it with a 2-year loan at 2.7% APR. What will her monthly auto payment be?

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  1. 10 August, 00:03
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    Present value of annuity = 12P (1 - (1 + r/12) ^-12n) / r

    19,600 = 12P (1 - (1 + 0.027/12) ^ - (2 x 12)) / 0.027

    0.027 x 19600 = 12P (1 - (1 + 0.00225) ^-24)

    529.2 = 12P (1 - (1.00225) ^-24)

    12P = 529.2 / (1 - 0.9475) = 529.2 / 0.0525

    P = 10,077.9995 / 12 = $839.83

    Therefore, her monthly payment = $839.83
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