the Howards have realized that their old college car is not going to work out very well in their new location and phase of life. They are wondering whether budget would allow for a vehicle loan of $14,500 to be set up at a 6.9% APR compounded monthly for 5 years (60 months).
a) How much would their monthly payment be given the details stated above?
b) How much interest would they have to pay during the five years they didn't pay the extra principal?
a) How much would their monthly payment be given the details stated above?
b) How much interest would they have to pay during the five years they didn't pay the extra principal?
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We set this up in the same exact way as the mortgage equation
L = P * S
S = ((1/t)^60 - 1) / (1 - t)
t = (1 + r/12)
r = 0.069
L = 14500
t = (1 + 0.069/12) = (12.069 / 12)
S = ((12/12.069)^60 - 1) / (1 - (12.069/12))
S = (1 - (12/12.069)^60) / (0.069/12)
S = (12/0.069) * (1 - (12/12.069)^60)
14500 = P * (12/0.069) * (1 - (12/12.069)^60)
14500 * (0.069 / 12) / (1 - (12/12.069)^60) = P
P = 286.43375936094180825043915987112
I don't quite understand what it's asking in part B. Is it asking how much interest they'll end up paying?
P * 60 - 14500 =>
2686.0255616565084950263495922674
I feel like I'm not getting all of the information
L = P * S
S = ((1/t)^60 - 1) / (1 - t)
t = (1 + r/12)
r = 0.069
L = 14500
t = (1 + 0.069/12) = (12.069 / 12)
S = ((12/12.069)^60 - 1) / (1 - (12.069/12))
S = (1 - (12/12.069)^60) / (0.069/12)
S = (12/0.069) * (1 - (12/12.069)^60)
14500 = P * (12/0.069) * (1 - (12/12.069)^60)
14500 * (0.069 / 12) / (1 - (12/12.069)^60) = P
P = 286.43375936094180825043915987112
I don't quite understand what it's asking in part B. Is it asking how much interest they'll end up paying?
P * 60 - 14500 =>
2686.0255616565084950263495922674
I feel like I'm not getting all of the information