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victor will borrow $6800 at 13.5% APR. He will pay it back over 3 years. What will his monthly payment be?

Table: 3.394

Respuesta :

The answer is 230.79

Here we are to calculate the monthly payment. In other words, the annuity payments

The formula to use is the present value of the annuity which is give by PVA = P *(1-(1+r)^-n)/r

r = monthly interest rate = 13.5/12 = 1.125% or 0.0125

n = 3 years = 36 months = 36

P (Monthly payment) = ? (To calculate)

PVA = 6,800

Substituting in the above formula we het

6,800 = P*(1-(1+0.0125)^-36)/0.0125

6,800 = P*28.84726737

P = 6,800/28.84726737

P = $235.72

Monthly payment = $235.72