Tom plans to purchase a used car for $18,450. The dealership will finance his purchase at 10.5%...

Question:

Tom plans to purchase a used car for $18,450. The dealership will finance his purchase at 10.5% APR for 48 months. Calculate the amount of Tom's monthly payment if he makes a down payment of $3,450 on the car.

Annuity:

Annuity refers to a series of equal amounts of deposits or payments, which is paid at an interval period of time. Examples of annuity are the monthly home mortgage payment, insurance payment, or monthly pension.

Answer and Explanation: 1

Become a Study.com member to unlock this answer!

View this answer

The following equation is the formula on calculating the monthly payments of the car.

{eq}Annuity=\displaystyle...

See full answer below.

Become a member and unlock all Study Answers

Try it risk-free for 30 days

Try it risk-free

Ask a question

Our experts can answer your tough homework and study questions.

Ask a question

Search Answers

Learn more about this topic:

Loading...
How to Find the Value of an Annuity

from

Chapter 21 / Lesson 15
9.4K

An annuity is a type of savings account that pays back the investor in the future. Learn the formula used to calculate an annuity's value, and understand the importance of labeling specific numbers to calculate an output over time.

Related to this Question

Explore our homework questions and answers library

Browse by subject