student at WTAMU She is in need of a vehicle to commute to s

student at WTAMU She is in need of a vehicle to commute to school She is interested in a crossover vehicle that costs a four year loan at 15% APR (nominal yearly rate) which is compounded monthly The dealer wil provide S6000 for her trade in payment will be most nearly ? $445

Solution

6.

Correct Answer:

C.$445

Working note:

Net value of loan = 22000-6000 = $16000

Time = 48 months

Monthly interest rate = 15%/12 = 1.25%

Let, monthly instalment = P

Then,

16000 = P*(1-1/1.0125^48)/.0125

P = 16000/((1-1/1.0125^48)/.0125)

P = $445.29 or $445