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Suppose that you decide to buy a car for 27,635, including taxes and license fees. You saved 5000 for a down payment and can get a four year car loan at 7.78% what is the monthly payment

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Answer:

Monthly payment= $550.25

Step-by-step explanation:

First, we need to calculate the value of the loan:

Loan= 27,635 - 5,000

Loan= $22,635

Now, the monthly payment:

Interest rate (i)= 0.0778/12= 0.006483

n= 4*12= 48 months

Loan (PV)= $22,635

We need to use the following formula:

Monthly payment= (PV*i) / [1 - (1+i)^(-n)]

Monthly payment= (22,635*0.007483) / [1 - (1.006483^-48)]

Monthly payment= $550.25

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