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The price of a new car is $40,000. Assume that an individual makes a down payment of 25% toward the purchase of the car and secures financing for the balance at the rate of 8%/year compounded monthly. (Round your answers to the nearest cent.) (a) What monthly payment will she be required to make if the car is financed over a period of 60 months? Over a period of 72 months?

Respuesta :

Answer:

- 60-month financing period: Monthly payment = $608.29 = 608 dollars 29 cents

- 72-month financing period: Monthly payment = $526.00 = 526 dollars

Step-by-step explanation:

As she has already made the down payment of 25% (= $10,000), the principal amount of the loan is now $30,000.

The monthly payment is calculated such that at the end of the financing period (60/72 months), the principal amount must equal to 0. As such calculations are complicated and prone to errors if done manually, please see the attached Excel working file for the detailed calculations.

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