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November 24, 2014

November 24, 2014

Posted by **Shelly** on Thursday, July 30, 2009 at 3:56pm.

Suppose A is the amount borrowed, r is the interest rate (in decimal form), and m is the total number of monthly payments.

Let w = (r)/(12)

Then the formula to determine the monthly payment amount for a loan is given by

monthly payment = Aw/1- (1)/(1+w)^m

Suppose Alice buys a car and obtains a 5 year loan for $25,000 at an interest rate of 6%.

(a) What is the numerical value of w?

Still trying to figure out what w is. I think it is $483.32 the monthly payment??

(b) What is the monthly payment? (Show values substituted in the formula, and calculate the numerical amount.) Note: Since the loan is an amount in dollars and cents, it’s important to maintain a high degree of precision in intermediate calculations, and round to the nearest cent at the end.

Loan amount P = 25,000

Interest Rate = r = 0.005 per month 6% interest annually

Number of Payments: 60

Payment amount, A = $483.32

483.32 (60) = $28,999.20 Total paid all together ????

28,999.20 – 25,000 = $3,999.20 interest paid.

Can someone show me how to solve this using algebra? Thanks!

- Algebra -
**MathMate**, Friday, July 31, 2009 at 6:47amYour answers are correct, but you have probably mis-interpreted the expression for the monthly payment. For detailed solution and the answer to a post by yourself or your classmate at:

http://www.jiskha.com/display.cgi?id=1249017180

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