Fritz Benjamin buys a car costing $21,900. He agrees to make payments at the end of each monthly period for 5 years. He pays 7.2% interest, compounded monthly. (a) What is the amount of each payment? (b) Find the total amount of interest Fritz will pay.
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The interest rate is $r = 7.2\% = 0.072$ per year. The interest is compounded monthly, so the monthly interest rate is $i = r/12 = 0.072/12 = 0.006$. The loan is for 5 years, so the number of months is $n = 5 \times 12 = 60$. Let $M$ be the monthly payment. Step Show more…
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