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8 December, 22:06

Using technology, determine the monthly payment on a 35 month loan of $28,000 at 8.1% compounded monthly. Round you answer to the nearest cent.

a.

$900.90

c.

$1,102.94

b.

$875.02

d.

$1,012.10

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Answers (1)
  1. 8 December, 22:22
    0
    Present Value of an annuity is given by the formular

    PV = P (1 - (1 + r) ^-n) / r; where PV = $28,000, r = 0.081/12 = 0.00675, n = 35 and P is the periodic (monthly) payment.

    P = PVr / (1 - (1 + r) ^-n) = (28,000 x 0.00675) / (1 - (1 + 0.00675) ^-35) = 189/0.2098 = 900.90

    Therefore, the monthly payment is $900.90
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