To buy a $20,000 car. the dealer offers you a 6-year loan with an 8 percent apr.
$72.88 are the monthly payments.
Given Amount = $20000
Months or time = 72 months
Rate of Interest = 8%
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
EMI = 20000* 0.0066667 * (1.0066667)^72)/ (1.006667)^72 -1
EMI = 133.334 * 1.6135/1.6135-1
EMI = 133.334 * 16135/0.6135
EMI = 350.66
So monthly payments are = $350.66
If I pay Interest only than payment would be = 350.66 - (20000/72) = 350.66 - 277.77 = $72.88.
In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals and organizations, etc. The beneficiary incurs a debt and is generally required to pay interest on that debt until the debt is repaid as well as the principal amount borrowed.
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