The monthly payment formula is :
[tex]M=P\times\frac{r(1+r)^n}{(1+r)^n-1}[/tex]
where M is the monthly payment
P is the Financed amount
r is the rate of interest monthly, annual rate divided by 12
n is the number of payments
From the problem,
The financed amount is the difference between the car's cost and the down payment.
P = $19,500 - $2,500
P = $17000
The monthly interest rate is :
r = 3.9%/12 or 0.039/12 = 0.00325
n = 36 months
The monthly payment will be :
[tex]\begin{gathered} M=17000\times\frac{0.00325(1+0.00325)^{36}}{(1+0.00325)^{36}-1} \\ M=501.15 \end{gathered}[/tex]
a. M = $501.15
b. The total payment for the car is monthly payment multiplied by the number of payment made together with the downpayment.
501.15 x 36 + 2500 = $20,541.4
c. The interest is the difference between the total payment made and the financed amount.
I = 501.15 x 36 - 17,000 = $1,041.4
