Chris and Carol just bought a $14,000 van and financed it for 5 years at 7% interest. What are the monthly payments?
I = PRT
I = 14,000 * 0.07 * 5
I = 4,900
(14,000 + 4,900)/60 = ?
Car payments are usually calculated using compound interest.
monthly rate = .07/12 = .005833333..
let the payment be P
P( 1 - 1.0058333^-60)/.0058333 = 14000
P = 14000/50.50199..
= $277.22
see same question in first of "Related Questions" below
To calculate the monthly payments on a financed loan, you need to use the loan amount, the interest rate, and the loan term.
In this case, the loan amount is $14,000, the interest rate is 7%, and the loan term is 5 years.
To calculate the monthly payment, you can use the formula for a fixed-rate loan:
Monthly Payment = Loan Amount * (Interest Rate / 12) * (1 + Interest Rate / 12)^(Number of Payments) / ((1 + Interest Rate / 12)^(Number of Payments) - 1)
Let's break down the calculation step by step:
Step 1: Convert the interest rate from a percentage to a decimal by dividing it by 100.
Interest Rate = 7% / 100 = 0.07
Step 2: Calculate the number of payments by multiplying the loan term by 12 (since there are 12 months in a year).
Number of Payments = 5 years * 12 months/year = 60 payments
Step 3: Plug the values into the formula and calculate the monthly payment.
Monthly Payment = $14,000 * (0.07 / 12) * (1 + 0.07 / 12)^(60) / ((1 + 0.07 / 12)^(60) - 1)
By evaluating this equation, the monthly payment for the loan is approximately $274.19.
Please note that this is an estimated monthly payment and doesn't account for any additional fees or charges that may be associated with the loan.