2.You want to buy a $23,000 car.

The company is offering a 3% interest rate for 60 months

(5 years). What will your monthly payments be?

Solution:
To calculate: The monthly payments to buy a car of worth $23,000 at 3% interest for 5 years
duration.

Step1: formulae to calculate the monthly payments is

r
d ((1  ) Nk  1)
PN  k
r
k
Where P N is the balance in the account after N years , d is the regular deposit you
make every year or month, r is the annual interest and k is the number of compounding
periods in one year.
Here PN = 23000 , N=5 , r=0.03 , k=12 , d=?

Step2: Calculation
0.03 5*12
d ((1  )  1)
23000  12
0.03
12
d ((1.0025)60  1)
23000 
0.0025
23000  d (64.6467)
d  $355.779
Hence our monthly payment will be #355.779 to buy a car of worth of $23,000 at 3%
interest for 5 years.