Question

You want to buy a new sports car from Muscle Motors for $43,000. The contract is in the form of an annuity due for 48 months at an APR of 6.25 percent. What will your monthly payment be?

Answer 1

The monthly payment is calculated using the PMT function as follows:-

=PMT(rate,nper,pv,fv,1)

=PMT(6.25%/12,48,43000,0,1)

=1009.53

Where,

rate is periodic rate

nper is number of periods

pv is present value

fv is futue value which is nil in this case

1 is used at the end of the equation when the annuity is annuity due meaning the payments occur at the beginning of the period rather than end