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The monthly payment for a 5-year car loan of $23,570 at 10.43% interest, compounded monthly will be $660
It is given that the monthly payment for a 5-year car loan of $23,570 at 10.43% interest, is compounded monthly.
It is required to find the monthly payment.
What is compound interest?
It is defined as the interest on the principal value or deposit and the interest which is gained on the principal value in the previous year.
We can calculate the compound interest using the below formula:
[tex]\rm A=P(1+ \frac{r}{n})^n^t[/tex]
Where A = Final amount
P = Principal amount
r = annual rate of interest
n = how many times interest is compounded per year
t = How long the money is deposited or borrowed (in years)
We have P = $23,570
r = 10.43% = 10.43/100 = 0.1043
n = 12
t = 5 years
Putting all the values in the formula, we get:
[tex]\rm A=23,570(1+\frac{0.1043}{12})^1^2^\times^5[/tex]
[tex]\rm A = 23,570\times1.680\\\rm A = 39597.6[/tex]
The monthly payment will be:
=[tex]\rm \frac{A}{t(in \ months)}[/tex]
[tex]\rm = \frac{39597.6}{60} \\\rm = 659.96\\\rm \approx 660[/tex]
Thus, the monthly payment for a 5-year car loan of $23,570 at 10.43% interest, compounded monthly will be $660.
Learn more about the compound interest:
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