Financial Formula

Question

What ' s your monthly payment on a new Camry if you borrow $20, 000 @ 1.99 % interest for 6 years? º

Answer 1

P = [PV]/[1-(1+r)^-n/r

 

P=Payment

r=APR interest rate

n=number of payment months

Remember that for the denominator, we have to divide the APR by 12

 

P=[20,000]/[1-(1+0.001658)^-6*12=-72/0.0199/12

 

P=  20000/[(1-0.8875426426)/(0.0199/12)

 

P=[20,000]/[(1-0.8875426426)/(0.0016583)

 

P=20,000/67.81484496

 

P=$294.92

 

An HP12-C calculator gives the answer as:  $294.43

 

 

 

So, the monthly payment is: