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Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced. To buy a car, you borrow $20,000 with a term of five years at an APR of 6%. What is your monthly payment? (Round your answer to the nearest cent.) $ 386.66 Correct: Your answer is correct. How much total interest is paid?

Respuesta :

Answer:

$3,199.60

Explanation:

The Monthly Repayment P is determined by:

[tex]P=\dfrac{r(PV)}{1-(1+r)^{-n}}[/tex]

Where:

r=rate per period

PV=Present Value

n=number of periods

PV=$20,000

r=6% APR = 0.06/12  =0.005 Monthly

n= 5 years = 5 X 12 Months =60 Months

[tex]P=\dfrac{0.005(20000)}{1-(1+0,005)^{-60}}[/tex]

   =$386.66

Total Repayment = $386.66 X 60=$23199.60

Interest Paid = Repayment - Present Value

                  =$23199.60 -20000

                  =$3,199.60