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 ```Loan Payments. If you take out an \$8,000 car loan that calls for 48 monthly payments at an APR of 10 percent, what is your monthly payment? What is the effective annual interest rate onthe loan?```
 ```Hi bacon1262!! Let me denote payment as PMT, then the formula that relates rate (r), principal (L), amount of payments (N), and PMT is: PMT = r*L / (1-(1+r)^-N) In this case we have: r = 0.10/12 = 0.008333333 PMT = 0.008333333 * 8000 / (1-(1.008333333)^-48) = = 66.66666667 / (1-0.671432) = = 66.66666667 / 0.328568 = = 202.90 The monthly payment is \$202.90 For references on the above formula and its derivation visit the following page: "Loan or Investment Formulas": http://oakroadsystems.com/math/loan.htm -Effective Annual Interest Rate: The monthly interest rate is r = 0.008333 = 0.8333%; therefore, the effective annual interest rate on the loan is: (1+r)^12 ? 1 = (1.008333)^12 ? 1 = 0.1047 = 10.47% For the above formula and definitions related visit Investopedia.com: "Annual Percentage Rate - APR": http://www.investopedia.com/terms/a/apr.asp "Effective Annual Interest Rate": http://www.investopedia.com/terms/e/effectiveinterest.asp Search strategy: My own knowledge and the following keywords at Google.com: "loan payment" formula APR rate "effective annual interest rate" I hope this helps you. Feel free to use the clarification feature if you find something unclear in the answer. Regards, livioflores-ga```