You are considering buying a new car for $45k and carloans is offering a rate of 7%p.a. compounded monthly.
You plan to make monthly payments over three years. How much would you need to repay per month to pay the principle and interest over the three years?
You are considering buying a new car for $45k and carloans is offering a rate of 7%p.a. compounded monthly.
You plan to make monthly payments over three years. How much would you need to repay per month to pay the principle and interest over the three years?
Your monthly payment will be=$1,389.47, which includes principal + interest. The formula you use to calculate this is:
PMT=PV. R.{[1 + R]^N/ [1 + R]^N - 1}=PMT NEEDED TO PAY OFF A LOAN OF $1, Where R=Interest rate per period, N=number of periods, PMT=periodic payment, PV=Present value.
PMT=$45,000* .07/12{[1 + .07/12]^(3*12)} / {[1 + .07/12]^3*12 - 1}
PMT=$45,000 x 0.030878
PMT=$1,389.47
