1. Limited time only! Sign up for a free 30min personal tutor trial with Chegg Tutors
    Dismiss Notice
Dismiss Notice
Join Physics Forums Today!
The friendliest, high quality science and math community on the planet! Everyone who loves science is here!

Engineering Economics

  1. Nov 29, 2015 #1
    1. Assume monthly car payments of $500 per month for 4 years and an interest rate of 0.75% per month. What initial principal will this repay?


    2. I'm looking for the formula that would be used to calculate it and how to apply it.


    3. My attempt - P*0.075= $500[1-(1+0.075)^(-48) I calculated 48 by 4 years multiply by 12

    My answer is 6459.50. Am I right or somewhere in the ball park? If I am wrong can you explain with what formula should be used?
     
    Last edited by a moderator: Nov 29, 2015
  2. jcsd
  3. Nov 29, 2015 #2
    I checked your formula, and it is correct, but it should have 0.0075 , rather than 0.075.
     
  4. Nov 29, 2015 #3
    Here's a check for you initial result: If you make 48 payments of $500, that comes out to $24000. Does it seem reasonable to you that at 9% interest, your original principal would be $6500, and the interest would be $17500?

    Chet
     
Know someone interested in this topic? Share this thread via Reddit, Google+, Twitter, or Facebook

Have something to add?
Draft saved Draft deleted



Similar Discussions: Engineering Economics
  1. Engineering Drawing (Replies: 2)

  2. Carnot engine (Replies: 4)

Loading...