Answer:
The monthly payments will be $353.12
Explanation:
Financing
When a purchase is made at present value and the payment will be financed at a rate of interest i for n periods, the present value PV is
[tex]\displaystyle PV=R\cdot \frac{1-(1+i)^{-n}}{i}[/tex]
where R is the regular payment (usually monthly).
Solving for R
[tex]\displaystyle R=PV\cdot \frac{i}{1-(1+i)^{-n}}[/tex]
It's important to recall than only the unpaid amount goes financing, if some down-payment is made, it must be subtracted from the PV to be financed.
The present value of the car is 17,250 from which the buyer will make a 5% down-payment. It means that the real financing amount is
[tex]PV=17,250\cdot 95\%=16,387.5[/tex]
The rate of interest is
[tex]i=6.8\%=6.8/(12\cdot 100)=0.00567[/tex]
It also follows that n=54.
Computing R
[tex]\displaystyle R=16,387.5\cdot \frac{0.00567}{1-(1+0.00567)^{-54}}[/tex]
[tex]\boxed{R=\$353.12}[/tex]
