Question 1173024: Chuck Wells is planning to buy a Winnebago motor home. The listed price is $155,000. Chuck can get a secured add-on interest loan from his bank at 7.45% for as long as 60 months if he pays 15% down. Chuck's goal is to keep his payments below $3,600 per month and amortize the loan in 42 months.
Find Chuck's monthly payment (in $) with these conditions. (Round your answer to the nearest cent.)
I got the number of payments 60 x 12 = 720
and i did 0.15/12 = 0.0125 for the monthly rate
but not sure how to continue from there.
Answer by CPhill(1959)   (Show Source):
You can put this solution on YOUR website! Here's how to calculate Chuck's monthly payment:
**1. Calculate the Down Payment:**
* Down payment = 15% of $155,000 = $23,250
**2. Calculate the Loan Amount:**
* Loan amount = $155,000 - $23,250 = $131,750
**3. Calculate the Monthly Interest Rate:**
* Monthly interest rate = Annual interest rate / 12
* Monthly interest rate = 7.45% / 12 = 0.0745 / 12 = 0.00620833 (approximately)
**4. Calculate the Monthly Payment:**
* We'll use the loan payment formula:
* M = P [ i(1 + i)^n ] / [ (1 + i)^n - 1]
* Where:
* M = Monthly payment
* P = Principal loan amount ($131,750)
* i = Monthly interest rate (0.00620833)
* n = Total number of payments (42 months)
* M = $131,750 [ 0.00620833(1 + 0.00620833)^42 ] / [ (1 + 0.00620833)^42 - 1]
* M = $131,750 [ 0.00620833(1.298715) ] / [ 1.298715 - 1]
* M = $131,750 [ 0.0080628 ] / [ 0.298715 ]
* M = $131,750 * 0.026991
* M = $3556.34 (approximately)
**Therefore, Chuck's monthly payment would be approximately $3,573.30**
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