Question

2. Muncer is considering the purchase of a used car. The price, including the title and taxes, is $8,000, he will be borrowed it from his credit union at an interest rate of 12 % compounded bi-weekly. The loan should be paid in 48 cqual monthly payments. a Compute the monthly payment. b. After making 24 payments, he negotiated the interest rale to be 6 % compounded annually, what will be his monthly payment?

Answer 1

1.
rate compounded monthly=((1+12%/26)^(26/12)-1)*12=12.0323160%

Monthly payment=8000*(12.0323160%/12)/(1-1/(1+12.0323160%/12)^48)=210.79764074

2.
rate compounded monthly=((1+6%)^(1/12)-1)*12=5.8410607%

Loan oustanding=8000*(1+12.0323160%/12)^24-210.79764074/(12.0323160%/12)*((1+12.0323160%/12)^24-1)=4476.62061419

Monthly payment=4476.62061419*(5.8410607%/12)/(1-1/(1+5.8410607%/12)^24)=198.08610930