Answer Happy

9. Aisha is looking for a $20,000 loan to buy a car. One financial institution has agreed to give her the loan under the following conditions: (1) She must pay interest at the fixed rate of 9.9% per year, compounded monthly. () She must pay off the loan in equal monthly payments made at month-ends. () () She must pay off the loan in 5 or less years. She wants you to help her figure out if she can afford to pay off the loan in five years. Do the following: (a) Determine the monthly interest rate j (b) Determine the total number n of payments she will make in 5 years. (c) Determine the value of the $20,000 loan five years from now. (d) At this moment her monthly payment is unknown. Let it be P dollars per month. Use the formula (1+j)" V P to calculate the total value V of all the n payments she will have to make in 5 years. (e) The value you obtained above should equal the value of the loan five years from now. Use that information to form an equation and solve it for P (f) What is the total amount of money Aisha will pay in the five years?