Daniel Nuckols is shopping for a used car

Finance Oct 15, 2020

Daniel Nuckols is shopping for a used car. He spotted a pre-owned car sales advertisement from Classic Nissan of Texoma dealership (see the attached photo). The advertised price of the 2018 Nissan Murano is $33,728. The dealer agreed to finance the car at a 9% annual interest rate, compounded monthly, for monthly payments over 3 years. Over these 3 years period, Daniel Nuckols will make monthly payments at the beginning of each month. What will be Daniel Nuckols's monthly payment for the car loan?

Expert Solution

Computation of Monthly Payment using PMT Function in Excel:

=pmt(rate,nper,-pv,fv,type)

Here,

PMT = Monthly Payment = ?

Rate = 9%/12 = 0.75% compounded monthly

Nper = 3 years * 12 months = 36 months

PV = $33,728

FV = 0

Type = 1

Substituting the values in formula:

=pmt(0.75%,36,-33728,0,1)

PMT or Monthly Payment = $1,064.56

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