You want to buy a new sports coupe for $79,500, and the finance office at the de

Question

You want to buy a new sports coupe for $79,500, and the finance office at the dealership has quoted you an A P R of 6.1 percent for a 72 month loan to buy the car. What will your monthly payments be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Monthly payment $ What is the effective annual rate on this loan? (Do not round intermediate calculations . Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Effective annual rate %

Explanation / Answer

1) Monthly payment = pmt(rate,nper,pv,fv)

rate = 6.1%/12

nper = 72

pv = 79500

fv = 0

Monthly payment = pmt(6.1%/12,72,-79500,0)

Monthly payment = $ 1321.30

2) Effective Annual Rate = (1+ APR/12)^12 - 1

Effective Annual Rate = (1+6.10%/12)^12 - 1

Effective Annual Rate = 6.27%

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