Question
Asked Feb 6, 2020
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An auto dealer has designed a marketing gimmick. They are asking their customers tinky only $109 at the end of each month, for the first two years for a car priced at $10,000. The APR on the vehicle is 5.40% and the total term of the loan is 5 years. What is the monthly payment for the remaining three years? Interest is payable during the entire five year period. 

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Expert Answer

Step 1

The monthly payment is the lowest amount which an investor needed to save to get the required amount in the future at a specified annual rate.

Given Information:

Initial price is $10,000

PMT for two years is $109

APR is 5.40%

Loan tenure is 5

Step 2

Calculations:

Firstly, calculate the amount which is paid till now:

Finance homework question answer, step 2, image 1

Step 3

The future value will be:

Finance homework question answer, step 3, image 1

...

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