SOLUTION: Could you please help me with this problem? Mr.Cruz wants to borrow $40,000 from the bank to buy the new Ford F-150 Lightning. If the bank can offer him a five year loan for 2.

Question 1201662: Could you please help me with this problem?
Mr.Cruz wants to borrow $40,000 from the bank to buy the new Ford F-150 Lightning.
If the bank can offer him a five year loan for 2.5% annual interest compounded monthly,then what will his monthly payments be?
Found 2 solutions by ikleyn, math_tutor2020:
Answer by ikleyn(52840) (Show Source): You can put this solution on YOUR website!
.
Mr.Cruz wants to borrow $40,000 from the bank to buy the new Ford F-150 Lightning.
If the bank can offer him a five year loan for 2.5% annual interest compounded monthly, then what will his monthly payments be?
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Go to web-site

https://www.calculatorsoup.com/calculators/financial/loan-calculator.php

Find there free of charge online calculator, specially developed
to make this kind of calculations for "students" homework
with complete explanations.

Print your input data in calculator and get your answer immediately.

In parallel, learn the relevant formulas and calculation technique from the accompanying text.

Answer by math_tutor2020(3817) (Show Source): You can put this solution on YOUR website!

Answer: $709.89

Work Shown:

The formula to use is
P = (L*i)/( 1-(1+i)^(-n) )
where,
P = monthly payment
L = loan amount
i = monthly interest rate in decimal form
n = number of months

In this case
L = 40,000
i = 0.025/12 = 0.00208333 approximately
n = 5*12 = 60 months

Then,
P = (L*i)/( 1-(1+i)^(-n) )
P = (40000*0.00208333)/( 1-(1+0.00208333)^(-60) )
P = 709.894393670184
P = 709.89

The answer can be confirmed with a calculator such as this one
https://www.calculator.net/loan-calculator.html

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