Homework Help: Finite Math

Posted by f0REVERYUng on Saturday, May 5, 2012 at 12:29am.

In August 2008, General Motors was offering the choice of a 2.9% loan for 36 months, or $2000 cash back on the purchase of a $30,000 Pontiac Grand Prix.

(a) If you take the 2.9% loan offer, how much will your monthly payment be?
$_________

(b) If you take the $2000 cash-back offer and can borrow money from your local credit union at 8.1% interest compounded monthly for three years, how much will your monthly payment be?
$_________

Finite Math - Henry, Sunday, May 6, 2012 at 9:18pm
Pt = (Po*r*t)/(1-(1+r)^-t).

r = (2.9%/12) / 100% = 0.00242 = Monthly % rate expressed as a decimal.

t = 36 Months.

Pt=(30,000*0.00242*36)/(1-(1.00242)^-36
= $31,362.03.

a. Monthly = 31,362.03 / 36 = $871.17.

b. Monthly = $941.48.
Use same procedure as part a.

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