Respuesta :
Joey wants to pay for a $3,000 automobile over three years at a 12% interest rate with a 20% down payment. His monthly payment will be $79.70.
What is interest rate?
The proportion that the lender charges as payment for the loan is known as the interest rate. The annual percentage rate, or APR, seeks to depict the cost of borrowing more accurately. The interest rate, fees, and discount points are all factored into the APR calculation.
Explanation:
Present value, PV = 3000
Down payment = 3000 X 20% = 600
Remaining present value= $(3000-600) = $2400
Interest = i = 12% = 0.12
As we need monthly payment, the interest ratee will be monthly = 0.12/12 = 0.01
No. of period, n =3
Monthly payment, m = 12
We know,
Present value of annuity = PMT X [tex]\frac{1 - (1+ \frac{i}{m} )^{-n+m} }{\frac{i}{m} }[/tex]
2400= PMT x [tex]\frac{1 - (1+ \frac{0.12}{12} )^{-3+12} }{\frac{0.12}{12} }[/tex]
PMT= $79.70
What is the purpose of the interest rate?
An interest rate informs you of how much borrowing will cost you and how much saving will pay off. Therefore, the interest rate is the amount you pay for borrowing money and is expressed as a percentage of the entire loan amount if you are a borrower.
Learn more about interest rate: https://brainly.com/question/13324776
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