A car dealer advertise the sale of a car model far a cash price of P280,000

Accounting Jan 16, 2021

A car dealer advertise the sale of a car model far a cash price of P280,000. If purchased in installment, the required down payment is 15% and balance payable in 18 equal monthly installments at an interest rate of 1.5% per month. How much will be the required monthly payments?

Expert Solution

Correct option is a.

Computation of Monthly Payments using PMT Function in Excel:

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

Here,

PMT = Monthly Payment = ?

Rate = 1.5% compounded monthly

NPER = 18

PV = 280,000*(1-15%) = 238,000

FV = 0

Substituting the values in formula:

=pmt(1.5%,18,-238000,0)

PMT or Monthly Payments = 15,185.78

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