Landon Wallin is an auto mechanic who wishes to start his own business. He will need $3900 to purchase tools and equipment. Landon decides to finance the purchase with a 36-monthfixed installment loan with an APR of 4.5​%.a) Determine​ Landon's finance charge.​b) Determine​ Landon's monthly payment.

Question
Asked Nov 5, 2019

Landon Wallin is an auto mechanic who wishes to start his own business. He will need $3900 to purchase tools and equipment. Landon decides to finance the purchase with a 36-monthfixed installment loan with an APR of 4.5​%.

a) Determine​ Landon's finance charge.
​b) Determine​ Landon's monthly payment.
check_circleExpert Solution
Step 1

Here, the loan amount is $3900, r = 4.5% = 0.045, t = 36 months and n = 12 for monthly payment.

0.045, t 36 and n
Substitute PV =
$3900, r
12 in
=
1+
п
РV-РМT
п
-36
0.045
1_
1+
12
3900 PMT
0.045
12
-36
1-(1.00375)
3900 PMT
0.00375
0.12606
3900 PMT
0.00375
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0.045, t 36 and n Substitute PV = $3900, r 12 in = 1+ п РV-РМT п -36 0.045 1_ 1+ 12 3900 PMT 0.045 12 -36 1-(1.00375) 3900 PMT 0.00375 0.12606 3900 PMT 0.00375

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Step 2

On further simplificati...

3900 PMT(33.616)
3900
= PMT
33.616
116.0161 PMT
PMT 116
Thus, the Landon's monthly payment is approximately $1166
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3900 PMT(33.616) 3900 = PMT 33.616 116.0161 PMT PMT 116 Thus, the Landon's monthly payment is approximately $1166

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