a) How much will the monthly payment on a five yr car loan that changes 8.1% interest (compounded monthly) if the amount borrowed is $12,000? b) How much total interest will be paid over the life of the loan
for A i think it's 300?
Most loans don't charge compound interest. You sure this is right?
I am wrong . I am a monkey . you;re right
To calculate the monthly payment on a car loan, you can use the formula for the present value of an annuity:
P = r * (PV / (1 - (1 + r)^(-n)))
Where:
P = Monthly payment
r = Monthly interest rate
PV = Present value or loan amount
n = Total number of payments
In this case, the interest rate is 8.1% and is compounded monthly, so the monthly interest rate would be 8.1% / 12 = 0.675%.
a) Let's calculate the monthly payment on the car loan:
P = 0.00675 * (12000 / (1 - (1 + 0.00675)^(-60)))
Using this formula, the result comes out to be approximately $240.76. So, the monthly payment on a five-year car loan with an interest rate of 8.1% (compounded monthly) and a loan amount of $12,000 should be around $240.76.
For part b), to calculate the total interest paid over the life of the loan, you can subtract the loan amount from the total amount paid. The total amount paid can be found by multiplying the monthly payment by the total number of payments.
Total amount paid = Monthly payment * Total number of payments
In this case, the total number of payments is 5 years * 12 months = 60 payments.
Total amount paid = $240.76 * 60 = $14,445.60
Now, subtracting the loan amount from the total amount paid gives us the total interest paid:
Total interest paid = Total amount paid - Loan amount
Total interest paid = $14,445.60 - $12,000 = $2,445.60
Therefore, the total interest paid over the life of the loan would be approximately $2,445.60.