##### I need help with finding monthly payments

 Business & Finance Tutor: None Selected Time limit: 1 Day

A commercial bank will loan you \$51,084 for 5 years to buy a car. The loan must be repaid in equal monthly payments at the end of the month. The annual interest rate on the loan is 16.47 percent of the unpaid balance. What is the amount of the monthly payments?

Sep 1st, 2015

Loan: 51084

Period 5 Years

Interest is 16.47 on reducing balance

Monthly Payment?

The total Months  5 X 12= 60 Months

The monthly repayment will be 51084/60

=\$ 851.4  = Interest which we calculate as

Factor it from being annual to monthly

16.47%/12 = 0.013725

Remember this is monthly

using the formula

M = P * ( J / (1 - (1 + J)-N)). where
• M = payment amount
• P = principal, meaning the amount of money borrowed
• J = effective interest rate. Note that this is usually not the annual interest rate; see below for an explanation.
• N = total number of payments
then

Because of time factor I will post the rest in a moment. Thanks

Sep 1st, 2015

Factoring the values in to the fomula gives:

M = P * ( J / (1 - (1 + J)-N)).

51084 x ( 0.013725 / (1-(1+ 0.013725)^-60))

= 51084 x ( 0.013725/ ( 1- 0.4413576 ))

=51084 x 0.024568

= \$1255.032

Sep 1st, 2015

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Sep 1st, 2015
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Sep 1st, 2015
Dec 2nd, 2016
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