P-is-your-car-loan-principal-25000-Math-Discussion-Post-help
Choose one of the consumer math concepts discussed in the chapter and explain where it would be useful and give a sample calculation (
DO NOT
select Car Payments as there is an example below using that concept).
- Calculating the monthly payment of a loan or credit card
- Total amount of money paid for a loan
- Monthly payment of a mortgage
- The amount of interest paid for a loan.
EXAMPLE:
There are many practical applications for the concepts and formulas discussed in the Consumer Math chapter.The concepts include calculating the monthly payment of a loan or credit card,total amount of money paid for a loan, monthly payment of a mortgage, and the amount of interest paid for a loan. Pick one of the concepts discussed in this chapter and give a real-world example of when it would be useful.
A real life example of consumer mathwould be calculating monthly car payments. A car payment is calculatedusing the price of the car (the principal), the interest rate, and number ofmonthly payments (how long you plan to finance the car). For example, ifyou plan to finance a $25,000 car, with an interest of 6%, for 3 years, here ishow the monthly payment would be calculated:
(P x (i / 12)) / (1 – (1 + i / 12)-n) = monthly carpayment
- P is your car loan principal = $25000
- i is your interest rate = 0.06
- n is the number of monthly payments = 36
After plugging in the information and solving your monthly payment comes to:
($25,000 x (6% / 12)) / (1 – (1 + 6%/ 12)-36) =
= (25,000 x (0.06 / 12)) / (1 – (1 +0.06 / 12) -36) =
= (25,000 x 0.005) / (1 – (1 +0.005) -36) =
= $760.55
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