Before purchasing a used car, Cody Lind checked www.kbb.com to learn what he sho

Question

Before purchasing a used car, Cody Lind checked www.kbb.com to learn what he should offer for the used car he wanted to buy. Then he conducted a carfax.com search on the car he found to see if the car had ever been in an accident. The Carfax was clean so he purchased the used car for $15,000. He put $2,500 down and financed the rest with a 48-month, 7.5% loan.

What is his monthly car payment by formula? (Round your answer to the nearest cent.)

Before purchasing a used car, Cody Lind checked www.kbb.com to learn what he should offer for the used car he wanted to buy. Then he conducted a carfax.com search on the car he found to see if the car had ever been in an accident. The Carfax was clean so he purchased the used car for $15,000. He put $2,500 down and financed the rest with a 48-month, 7.5% loan.

Explanation / Answer

Monthly payment = principal * interest rate (1 + interest rate)number of payment

( 1 + interest rate)number of payment - 1

=$12500 * 0.00625 (1 + 0.00625)48

( 1 + 0.00625)48 - 1

= $12500 * 0.00843 / 0.3486

= $302

Note:-   principal = Cost - down payment

= $15000 - $2500

= $12500

Interest rate monthly =7.5 % / 12 = 0.00625

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