Question

Derek borrows $32,107.00 to buy a car. He will make monthly payments for 6 years. The car loan has an interest rate of 6.26%. After a 13.00 months Derek decides to pay off his car loan. How much must he give the bank?

Answer 1

PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)]

C = Cash flow per period

i = interest rate

n = number of payments

32107= Cash Flow*((1-(1+ 6.26/1200)^(-6*12))/(6.26/1200))

Cash Flow = 536.06

PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)]

C = Cash flow per period

i = interest rate

n = number of payments

PV= 536.06*((1-(1+ 6.26/1200)^(-4.91666666666667*12))/(6.26/1200))

PV = 27163.05