Question

On January 1, LaQuita bought an used car for $7,200 and agreed to pay for it as follows: 1/3 down payment, the balance to be paid in 36 equal monthly payments, the first payment due February 1, an annual interest rate of 9% compounded monthly. a. What is the amount of LaQuita's monthly payment b. During the summer LaQuita made enough money to pay off the entire balance due on the car as of October 1 (October 1 payment plus the amounted owed on the loan). How much did LaQuita owe on October 1 after the October 1 payment?

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Answer 2 Parta) 3 amount of loan = cost of car-down payment 4 = 7200 - 7200*1/3) 5 = $ 4800 7 Monthly payment = loan amount / ((1-(1+i)^-n)/i) 8 = 4800/(((1-(1+(9%/12))^-36)/(9%/12)) 9 = 4800 / 31.44681 10 = $152.64 12 Thus the monthly payment = $ 152.64 14 Part b) 15 amount owed after 9 payments 16 = monthly payment * ((1-(1+i)^-(n-9))/i) 17 = 152.64*(((1-(1+9%/12)) ^-27)/(9%/12)) 18 = 152.64*24.35949 19 = $ 3718.23 21 Thus the amount outstanding after october 1 payment = $ 3718.23 23 For any help please comment in the comment box Thank You