A $34,000 new car loan is taken out with the terms 9% APR for 48 months. How much are monthly payments on this loan?OA. $846.09OB. $930.70OC. $1,015.31OD. $1,099.92

We can use the present value of annuity formula:PV = PMT × [1 - 1/(1+r)n] / rWhere:PV is the present value ($34,000)PMT is the monthly paymentr is the monthly rate of interest (9% / 12 = 0.75% or 0.0075)n is the number of compounding periods (48 months)$34,000 = PMT × [1 - 1/(1 + 0.0075)48] / 0.0075$34,000 = PMT × [1 - 1/(1.0075)48] / 0.0075$34,000 = PMT × (1 - 0.69861413566) / 0.0075$34,000 = PMT × 0.30138586434 / 0.0075$34,000 = PMT × 40.184781912PMT = $34,000 / 40.184781912PMT = $846.09Hence, we conclude that A. $846.09 is the correct answer to the question.

Answered: A $34,000 new car loan is taken out…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A $34,000 new car loan is taken out with the terms 9% APR for 48 months. How much are monthly payments on this loan? OA. $846.09 OB. $930.70 OC. $1,015.31 OD. $1,099.92 (II)