Answer :
The cost is $374.67 per month if the automobile is financed for 5 years.
What does interest rate actually mean?
A rate of interest tells you how expensive borrowing is or how advantageous saving is. As a result, the amount you pay for borrowing money, stated as a percentage of the entire loan amount, is the interest rate if you are a borrower. When the Fed increases interest rates, the market's price of existing bonds immediately declines. This is because new bonds will soon be issued that will offer investors higher interest rates.
Monthly Car Payment = [tex]P(\frac{r}{12} /1-(1+\frac{r}{12}) ^{-m})[/tex]
Here, P = $19,900
r = 4.9%
m = 60 months
Therefore, Monthly Payment = 19,900 [tex](0.049/12)/(1-(1+0.049/12)^{-60}[/tex]
Solving, the above equation we get
Monthly Payment =$ [tex]$81.25/(1-(1+0.049/12)-^{-60} )[/tex]
=$374.67 per month
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