You want to buy a new sports coupe for $75,500, and the finance office at the dealership has quoted you a 5.7 percent APR loan for 60 months to buy the car. |
What will your monthly payments be? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
Monthly payment | $ |
What is the effective annual rate on this loan? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
Effective annual rate | % |
Hi,
Please find the answer as follows:
Part A:
Nper = 60 (indicates the period over which the payments are made)
PV = 75500 (indicates the value of loan)
Rate = 5.7%/12 (indicates monthly interest rate)
FV = 0 (indicates future value of loan, not relevant in this case)
PMT = ? (indicates monthly payment)
Amount of Monthly Payment = PMT(Rate,Nper,PV,FV) = PMT(5.7%/12,60,-75500,0) = 1449.12
Part B:
Effective Annual Rate of Interest = (1+R/12)^12 - 1 = (1+5.7%/12)^12 - 1 = 5.85%
Thanks.
Hi,
Please find the answer as follows:
Part A:
Nper = 60 (indicates the period over which the payments are made)
PV = 75500 (indicates the value of loan)
Rate = 5.7%/12 (indicates monthly interest rate)
FV = 0 (indicates future value of loan, not relevant in this case)
PMT = ? (indicates monthly payment)
Amount of Monthly Payment = PMT(Rate,Nper,PV,FV) = PMT(5.7%/12,60,-75500,0) = 1449.12
Part B:
Effective Annual Rate of Interest = (1+R/12)^12 - 1 = (1+5.7%/12)^12 - 1 = 5.85%
Thanks.
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