Question

Pat Radigan is planning to buy a Toyota hybrid for $18,919 with $2,800 down and plans to finance the car. Citizens' Financial Bank quoted a finance charge at 8% for 48 months; Charter One Bank quoted him a finance charge at 7.5% for 60 months. a. What would be his monthly payment to Citizens' Financial Bank? (Do not round intermediate calculations. Round your answer to the nearest cent.) Monthly payment b. What would be his monthly payment to Charter One Bank? (Do not round intermediate calculations. Round your answer to the nearest cent.) Monthly payment c. How much more would his monthly payment be on the 48-month loan? (Do not round intermediate calculations. Round your answer to the nearest cent.) More in monthly payment

Answer 1

(a) CALCULATION FOR TO CITIZEN'S MONTHLY PAYMENT FINANCIAL BANK : cost of the vehicle = $18919 Down payment of the vehicle = $2800 Loan amount = $18918 - $2800 = $16119 monthly Payment (EMI) = P x ocito)" (1+8r - 1

where P = Principal amount 8 = fate of interest per month = No. of monthly installment For citizens Financial Bank, p= $ 16119 mo 48 Keeping valued in the formula, EMI = 16119 X I EMI = $393.51 b) CALCULATION OF EMI FOR CHARTER ONE BANK 2x100 Loan amount (P)= $16 119 Rate of Interest per month (0) = 45 Number of monthly payments (n) = 60 EMI = P x 0(1+0)" (1+r)n- = 16115 melho ( + 2 X 10 / LEMI = $322.99 /

(0) Amount by which monthy payment of 48-months loan exceeds 60-months loan = $293.51 - $322.99 = $70.52