Assume A is amount borrowed, r is interest rate (in decimal form), and m is total number of monthly payments.
Let w = r / 12.
Then formula to find monthly payment amount for the loan is provided by
Monthly payment = Aw / 1-(1+w)-m
Assume Alice purchases the car and gets six year loan for $32,000 at interest rate of 6%.
(a) Find numerical value of w?
(b) Determine the monthly payment? (Illustrate values substituted in formula, and compute numerical amount.) As loan is the amount in dollars and cents, it is significant to maintain the high degree of precision in intermediate calculations.
(c) If Alice makes all 72 payments, how much paid altogether?
(d) If Alice makes all 72 payments, how much paid in interest?