Answer:
Jane's monthly payment is $455.6
Step-by-step explanation:
Given :
The price, including tax, of SUV is $22,500.00.
She finances the vehicle over 60 months after making a $2,000 down payment.
The true annual interest rate is 12%.
To Find : What are Jane's monthly payments
Solution :
Since we are given that he made a down payment of $2000
So, After making the down payment the amount becomes : 22500-2000
=$20500
Now, Formula of monthly payment :
Monthly payment, [tex]M=\frac{\text{Amount}}{\text{Discount factor}}[/tex]
Discount factor [tex]D=\frac{1-(1+i)^{-n}}{i}[/tex]
Where, Amount = $20500
Rate r= 12%=0.12
[tex]i=\frac{0.12}{12}=0.01[/tex]
[tex]n=60[/tex]
Now, substituting all the values we get,
[tex]D=\frac{1-(1+i)^{-n}}{i}[/tex]
[tex]D=\frac{1-(1+0.01)^{-60}}{0.01}[/tex]
[tex]D=\frac{1-(1.01)^{-60}}{0.01}[/tex]
[tex]D=\frac{1-0.55}{0.01}[/tex]
[tex]D=\frac{0.45}{0.01}[/tex]
[tex]D=45[/tex]
Monthly payment, [tex]M=\frac{\text{Amount}}{\text{Discount factor}}[/tex]
[tex]M=\frac{20500}{45}[/tex]
[tex]M=455.6[/tex]
Hence , Jane's monthly payment is $455.6
