Kevin had 2 options. He could rent a car for $450 for each month or buy...
Kevin had 2 options. He could rent a car for $450 for each month or buy it $1800. He financed it with interest rate 7.25% compound quarterly and he has to pay off in 6 months. What would be monthly payment ?
Homework Answers
Monthly payments can be calculated using the formula: Loan amount*(r/n)/(1-(1+r/n)^-nt); Here r is the interest rate per quarter, as it is quarterly compounding= 7.25%/4= 1.8125%, n is the number of payments per quarter=3 and t is number of quarters=2.
On substituting, we get 1800*(1.8125%/3)/(1-(1+1.8125%/3)^-6= 306.38
So, Monthly Payment would be $306.38
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