1. **State the problem:** We need to find the monthly payment on a car loan of 18500, with an annual interest rate of 2.45%, over 8 years. Interest is compounded monthly. 2. **Identify variables for the PMT function:** - Principal (Pv) = 18500 - Annual interest rate = 2.45% or 0.0245 - Months in the loan (Nper) = 8 years \times 12 months/year = 96 months - Monthly interest rate (Rate) = Annual rate / 12 = 0.0245 / 12 3. **Calculate monthly interest rate:** $$\text{Rate} = \frac{0.0245}{12} = 0.0020417$$ 4. **Apply the PMT formula:** The PMT function in Excel is given by: $$PMT = \frac{Rate \times Pv}{1 - (1 + Rate)^{-Nper}}$$ Substitute values: $$PMT = \frac{0.0020417 \times 18500}{1 - (1 + 0.0020417)^{-96}}$$ 5. **Calculate denominator:** $$1 - (1 + 0.0020417)^{-96} = 1 - (1.0020417)^{-96}$$ Calculate the power term: $$ (1.0020417)^{96} \approx e^{96 \times \ln(1.0020417)} \approx e^{96 \times 0.00204} \approx e^{0.196} \approx 1.216$$ So, $$ (1.0020417)^{-96} = \frac{1}{1.216} \approx 0.822$$ Therefore, $$1 - 0.822 = 0.178$$ 6. **Calculate numerator:** $$0.0020417 \times 18500 = 37.77$$ 7. **Compute monthly payment:** $$PMT = \frac{37.77}{0.178} \approx 212.13$$ **Final answer:** The monthly payment is approximately $212.13$.