Question

3) You have decided to purchase a new car and can afford monthly car payments of $400. Assuming you decide to make payments for 60 months and can get an annual interest rate of 8%, what is the maximum purchase price you can afford?

Answer #1

The maximum purchased price you can afford is equal to the present value of the monthly car payments

Annual interest rate = 8%

Monthly interest rate = 8% 12

Monthly interest rate = 0.67%

Present value of monthly payment = $ 400
1.0067^{1} + $ 400
1.0067^{2} + $ 400
1.0067^{3} + $ 400
1.0067^{4} + $ 400
1.0067^{5} + $ 400
1.0067^{6} + -------------------------------+ $ 400
1.0067^{59} + $ 400
1.0067^{60}

Present value of monthly payment = $19,708.76

**The maximum purchase price you can afford =
$19,708.76**

You have decided to purchase a car that costs $17,500. You will
pay $2,000 down and will finance the rest. You plan on making
monthly payments of $400 for 60 months. What is the monthly
interest? What is the annual interest rate?

If you want to buy a car, and you can afford a monthly payment
of $400, how large of a loan can you get at 7.9% interest over 60
months(5 years)? Round your answer to the nearest dollar.

You want to buy a new car, but you can make an initial payment
of only $1729 and can afford monthly payments of at most $517. If
the interest rate is 9.4 percent per year compounded monthly and
you finance the purchase over 48 months, what is the maximum price
you can pay for the car?
25938.83
18787.33
25587.3
19526.21
22346.81

You want to buy a new car, but you can make an initial payment
of only $1,600 and can afford monthly payments of at most $750.
a. If the APR on auto loans is 12% and you
finance the purchase over 48 months, what is the maximum price you
can pay for the car? (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
Maximum Price =
b. How much can you afford if you finance the
purchase...

You have saved $5,000 for a down payment on a new car. The
largest monthly payment you can afford is $400. The loan will have
a 15% APR based on end-of-month payments. What is the most
expensive car you can afford if you finance it for 48 months? For
60 months? Do not round intermediate calculations. Round your
answers to the nearest cent.

You are looking to buy a car. You can afford $520 in monthly
payments for four years. In addition to the loan, you can make a
$1,700 down payment. If interest rates are 8.75 percent APR, what
price of car can you afford (loan plus down payment)? (Do
not round intermediate calculations and round your final answer to
2 decimal places.)

You have just graduated and have decided to purchase a brand new
sports car to enjoy your newfound freedom. Your local credit union
will provide financing for 60 months at a 9 percent annual rate,
compounded monthly. You will give 15 percent of the $26,000
purchase price in cash to the dealer. The credit union will be used
to finance the remaining 85 percent of the purchase price with the
first payment due 1 month from today. What will be...

You want to buy a new car. You can afford payments of $450 per
month and can borrow the money at an interest rate of 6.8%
compounded monthly for 3 years.

You really want to buy a used car for $11,000, but can only
afford $200 a month. What annual interest rate (compounded monthly)
would you need to find to be able to afford the car, assuming the
loan is for 60 months? Estimate the rate to the nearest
percent.

You want to buy a new car. You can afford payments of $300 per
month and can borrow the money at an annual interest rate of 5.5%
compounded monthly for 5 years. How much are you able to borrow? $
How much interest do you pay? $

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 27 minutes ago

asked 33 minutes ago

asked 44 minutes ago

asked 58 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 3 hours ago

asked 3 hours ago

asked 3 hours ago