Jamal is going to borrow $25,000 from his credit union to buy a used car. The APR is 7% and the length of the loan is 5 years. What will his monthly payments be? How much is his financial charge?
Accepted Solution
A:
Answer:The monthly payment for the loan amount is $584.375 The financial charge = $10,062.5 Step-by-step explanation:Given as :The borrow amount of Jamal = p = $25,000The annual rate = r = 7%The time period of loan = t = 5 yearsLet The monthly payment amount = $ xLet The amount = $ AFrom compounded methodAmount = Principal × [tex](1+\dfrac{\textrm rate}{100})^{\textrm time}[/tex]Or, A = $25,000 × [tex](1+\dfrac{\textrm r}{100})^{\textrm t}[/tex]Or, A = $25,000 × [tex](1+\dfrac{\textrm 7}{100})^{\textrm 5}[/tex]Or, A = $25,000 × [tex](1.07)^{\textrm 5}[/tex]Or, A = $25,000 × 1.4025∴ A = $35062.5So, The amount of the loan for 5 years = $35062.5Now, Interest = Amount - PrincipalOr, Interest = $35062.5 - $25,000∴ Interest = $10,062.5So, The financial charge = Interest = $10,062.5Now Again, As the time period = 5 years = 5 × 12 = 60 monthsSo, The monthly payment amount = [tex]\dfrac{\textrm total amount }{\textrm total months}[/tex]or, The monthly payment amount = [tex]\frac{35062.5}{60}[/tex]Or, x = $584.375So, Monthly payment = x = $584.375Hence The monthly payment for the loan amount is $584.375 And The financial charge = $10,062.5 Answer