Jerry’s new car has a list price of $22,415. The sales tax in Jerry’s state is 8.75%, and he is responsible for a $1,925 vehicle licensing fee and a $79 documentation fee. Jerry plans to make a down payment of $3,000 and finance the rest at an interest rate of 10.86%, compounded monthly. If Jerry’s financing plan spans three years, what will his monthly payment be? a. $732.35 b. $959.93 c. $769.62 d. $763.89
I used an auto loan calculator to compute for the monthly payment. But if you want to use manual calculation: use this formula:
A = P * [(r(1+r)^n)] / [(1+r)^n-1] A = monthly payment P = principal r = interest rate per month (10.86%/12 months = 0.905% / 100% = 0.00905 n = number of months. (3 yrs x 12 mos = 36 months)
