I am trying to work through this problem and am having trouble. Can someone tell me what the "w" stands for in the equation and walk me through the steps? Below is what I have so far.
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!
Your 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