Suppose you buy a new car for 22000 you put down 1500 and...

Suppose you buy a new car for $22,000. You put down $1500 and take out a loan for the rest. You finance the loan for 5 years and make equal monthly payments. If the bank charges 7.9% apr compounded monthly, how much will your monthly payment be? When the five years is up and you own the car, how much have you actually paid for it?

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Transcript

00:01 Okay, the car then costs $22 ,000 and your down payment is $1 ,500, which means you're going to borrow $20 ,500.

00:14 To subtract this from this price here.

00:20 Now, to work out monthly payment, you use a calculator like the ti -84 plus.

00:25 There are finance apps on there you can use, and the one you need here.

00:30 Or just press the apps button first that you will find fourth row down second column across then choose finance and then choose tvm solver that brings up a menu you can use for all these kind of calculations involving finance so apps enter enter and the first thing to type in is n at the top that's number of months of the loan once a five -year loan and you're paying monthly, so you want a number of months.

01:06 So 5 times 12, 60 months is the length of the loan.

01:12 5 % is given to you in the question, that's 7 .9.

01:17 That's the easy bit.

01:19 Present value is the amount you are borrowing, is the loan.

01:24 The money comes to you, so as a plus number.

01:27 So you put here 20 ,500, the amount you borrow.

01:32 Pmt is the payment per month that i want to find.

01:36 So from now, it's a plus number.

01:37 So you put here 20, $20 ,500, the amount you borrow.

01:37 Pmt is the payment per month...