Agreed!

Muriel will pay the Volkswagen dealer a total of $14,136 to be paid in 60 equal montly installments. What is her monthly bill?

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Answer:

From the point of view of the lender, this is an annuity. The formula for the payment on an annuity is:

`"PMT"="PV"((i/n)/(1-(1+i/n)^(-nt)))` where PMT is the payment, PV is the present value of the loan/annuity, i is the interest rate, n is the number of payments per time period t.

You did not give the interest rate to be paid, so here are a couple of examples. You can put the interest rate in to get your answer:

(a) If the interest is 3% annual interest

`"PMT"=14136((.03/12)/(1-(1+.03/12)^(-60)))=254.01`

(b) If the interest is 5% annual interest

`"PMT"=14136((.05/12)/(1-(1+.05/12)^(-60)))=266.76`

(c) If the interest rate is 7% annual interest

`"PMT"=14136((.07/12)/(1-(1+.07/12)^(-60)))=279.91`

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