Question 1170478
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A man is considering the purchase of a used automobile. The total price is $6200. 
With  $1240 as a down payment, and the balance to be paid in 48 equal monthly payments 
with interest rate at 12% compounded monthly. The payments are due at the end of each month. 
Determine the monthly payment required.
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The loaned amount is  $6200 - $1240 = $4960.


To find the monthly payment M, use the formula

    M = {{{L*(r/(1-(1+r)^(-n)))}}}


where L is the loan amount of $4960; 

r = {{{0.12/12}}} = 0.01 is the effective compounding interest rate per month;

n is the number of payments (48 in this problem, as given).


Substitute these values into the formula and get for monthly payment

    M = {{{4960*(0.01/(1-(1+0.01)^(-48)))}}} = $130.62  (rounded).


Thus, the monthly payment is $130.62.    <U>ANSWER</U>
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Solved.