SOLUTION: A customer needs to borrow $7500 to purchase a used car. The car dealer arranges with a finance company to lend the customer the money at 2.9% compounded monthly for three years. W
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Question 1055222: A customer needs to borrow $7500 to purchase a used car. The car dealer arranges with a finance company to lend the customer the money at 2.9% compounded monthly for three years. What will the customer's monthly payment be?
I have:
PV= 7500, i= 2.9% = 0.029 / 12months = 0.002 416 67, n = 12months x 3years = 36, R= ? (monthly payment)
PV=R [1-(1 + i)^-n
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i
7500 = R [1 - (1.002 416 67)^-36 {Get rid of divisor (7500 x 0.00241667)= 18.125}
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0.002 416 67
18.125 = R[1 - 0.91677]
18.125 = R[0.8323]
R= 21.777
Now this not right. I reckon it's off by a decimal place as the TVM function on my TI 83 plus calculator makes out the answer as R = 217.78
Where am I going wrong? Answer by Fombitz(32388) (Show Source):
You can put this solution on YOUR website! I'm not sure of the formula you are using.
Here is the standard monthly payment formula.
It looks like you're missing a term.
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Yes, that's the answer you'll get with this formula and verified with EXCEL's PMT function.
