Nonannual compounding using a calculator Jesse Pinkman is th

?(Nonannual compounding using a calculator?) Jesse Pinkman is thinking about trading cars. He estimates he will still have to borrow? $33,000 to pay for his new car. How large will? Jesse\'s monthly car loan payment be if he can get a 2?-year (24 equal monthly? payments) car loan from the? university\'s credit union at an APR of 8.1 percent compounded? monthly?

Solution

The question is based upon the concept of present value of annuity. annuity is the equal amount at the regular intervval. Monthly Car Loan Payment = Car Loan / Present Value of annuity of 1 = $       33,000 / 23.01645 = $   1,433.76 Working: Present Value of annuity of 1 = (1-(1+i)^-n)/i Where, = (1-(1+0.003375)^-24)/0.003375 i 8.1%/24 = 0.003375 = 23.0164535 n 24 Thus, Monthly Car Loan payment is $ 1,433.76