Purchase Solution

# How to Calculate Monthly Car Payment

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So you're buying a car.You know that interest today is low. But you found a place where you can earn 1% interest per month. You invest \$1000 on the 1st of each month. By the end of the month, that \$1000 is now \$1010. You keep doing this for 4 months, then take that money to use on a down payment for a car that is \$22,323 (incl tax). What is the monthly car payment for this car at 6% annual interest for a 5 year loan?

##### Solution Summary

This solution is comprised of detailed calculation of the following question using both manual calculation and TI BA II Plus financial calculator. Question: So you're buying a car.You know that interest today is low.Ã? But you found a place where you can earn 1% interest per month.Ã? Ã? You invest \$1000 on the 1st of each month.Ã? By the end of the month, that \$1000 is now \$1010.Ã? You keep doing this for 4 months, then take that money to use on a down payment for a car that is \$22,323 (incl tax).Ã? What is the monthly car payment for this car at 6% annual interest for a 5 year loan?

##### Solution Preview

After 4 months, you have \$1,010 * 4 = \$4,040 saved up.
You use \$4,040 as a down payment on \$22,323: \$22,323 - \$4,040 = \$18,283.
Now you only have to pay monthly payment on \$18,283.

Using the TI BA II Plus financial calculator, follow these ...

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