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May 16th, 2010, 05:30 PM  #1 
Senior Member Joined: Jan 2009 Posts: 345 Thanks: 3  Payment question
Suppose you buy a car and take out a loan of $15,000 at 9% annual interest to be paid back over four years. What is the yearly payment you must make to pay off the loan in four equal payments? I get ((.09*15000)/(1(1.09)^4)) = $4630.03... could you explain why this wouldn't be the answer? 
May 16th, 2010, 06:48 PM  #2 
Global Moderator Joined: Oct 2008 From: London, Ontario, Canada  The Forest City Posts: 7,945 Thanks: 1135 Math Focus: Elementary mathematics and beyond  Re: Payment question
Given that simple interest is to be applied the yearly payments are (4 * (15000 * .09) + 15000)/4 = $5,100.00. (Could be wrong of course). It depends on how you interpret the question, no? For instance, is the interest charged against the $15,000 each year even though some of this principal will have been paid? Why do you divide by 1  1.09^4 ? 

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