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11. Terry decided to purchase a $15,999 MSRP vehicle at 4% interest rate for 6years. The dealership offered her a $1700 cash-back incentive, which sheaccepted. Taking all these factors into consideration, what monthly paymentamount can she expect?

Answer :

For this problem we can use the formula for the monthly payment formula given by:

[tex]P=\frac{r(PV)}{1-(1+r)^{-n}}[/tex]

Where:

P= represent the monthly payment (desired value)

PV= Present value = $15999-1700 = $14299

r= rate of interest per period = 0.04/12

n= number of periods = 12* 6 = 72 months

And if we replace into the monthly payment formula we got:

[tex]P=\frac{\frac{0.04}{12}(14299)}{1-(1+\frac{0.04}{12})^{-12\cdot6}}=\text{ \$223.710}[/tex]

And for this case the monthly payment that she can expect is $223.710

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