The question says using the formula

Question

P with a small n below it(Pn)
Pn=PMT(1-(1+i)^-n/i) the full parenthesis is divided by the I just to be clear

Pn=present amountborrowed
n=number of monthly pay periods
PMT=monthly payment
i=interest rate per month
A) determine the monthly payment on a 5 year car loan with a monthly percentage rate of .0625% for a car with an original cost of 21000 and 1000 down payment, to the nearest cent.
I set it up as
2000=x(1-(1+(.00625/12)^-5(12)/.00625/12)
when I put this in my calculatori got an error if possible did I make a error?

for part two
x=300(1-(1+(.00625/12)^-5(12)/.00625/12) is how I set it up but I still got a error in my calculator
please help I hope this is enough work to have guidance with!!
thank you so much

Answer 1

you are messing up the percentages.
you have .00625% , l think that has to be just .00625
I think the rate was 7.5% per annum, compounded monthly which will give
us .075/12 = .0625, don't divide it by 12 twice.
I also noticed you had 2000 istead of 20000

your calculation should be
20000=x(1-(1+(.00625)^-60)/.00625)
20000=x(1- 1.00625^-60)/.00625)

Try again.
I got quite a reasonable answer, what did you get ?

I dont know what part two is asking, but I see the same errors

Answer 2

I tried it again and for
A) I did 20,000=PMT(1-(1-.00-.00625/.00625-60)
20,000=PMT(-73.073)
PMT=$273.69

B)PN=300 (1-(1-.00625)/.00625-60)
PN=21921.8227
21922
-2100
$922
Is this now correct? Thank you

Answer 3

Part 2 was asking The affordable monthly payment is $300 for the same time period. Determine an appropriate down payment, to the nearest dollar.
As the work seen above I got $922

Answer 4

No
20000=x(1- 1.00625^-60)/.00625)
20000 = x(49.905308..)
x = $400.76

for the 2nd part, find the present value of 60 payments of $300
PV = 300(1 - 1.00625^-60)/.00625
= 14971.59

since you were buying a $21,000 car you will need a downpayment of
21000-14971.59
or $ 6028.41