Yvette takes out a conventional loan to purchase a car. The interest rate is 6.2% compounded monthly and Yvette has five years to repay the $9600 she borrowed. What are Yvettes payments?
2007-01-28 11:20:50 · 1 answers · asked by Eugene D 1 in Science & Mathematics ➔ Mathematics
The formula I found for this is:
P = Cr(1 + r)ⁿ/[(1 + r)ⁿ - 1]
where C is the amount of the loan ($9600), r is the interest rate, and n is the number of months (5 × 12 = 60).
Again with the interest rate, to make it realistic, you don't mean that it's 6.2% compounded monthtly. You mean that it's 6.2% annually, compounded monthly, which makes the actual monthly interest rate 6.2%/12 = 0.51666666667%.
P = $9,600(0.0051666666667)(1 + 0.0051666666667)^60/[(1 + 0.0051666666667)^60 - 1]
P = $186.49 per month
Which means that, after 60 months, she will have actually paid:
$186.49 × 60 = $11,189.34
on her initial loan of $9,600.
2007-01-31 04:16:46 · answer #1 · answered by Jim Burnell 6 · 1⤊ 0⤋