Sarah Maddox wants to buy a new car that will cost $18,000. She will make a down payment in the amount of $4,000. She would like to borrow the remainder from a bank at an interest rate of 9% compounded monthly. She agrees to make monthly payments for a period of two years in order to pay off the loan. Select the correct answer for each of the following questions:
(a) What is the amount of the monthly payment (A)?
1. A = $14,000 (A/P, 0.75%, 24).
2. A = $14,000(A/P, 9%, 2)/12.
3. A = $14,000(A/F, 0.75%, 24).
4. A = $14,000(A/F, 9%, 2)/12.
(b) Sarah has made 12 payments and wants to figure out the remaining balance immediately after the 12th payment. What is that remaining balance?
1. B₁₂ = 12A.
2. B₁₂ = A(P/A,9%,1)/12.
3. B₁₂ = A(P/A,0.75%,12).
4. B₁₂ = 10,000 - 12A.