Question

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 over 60 months? **(Do not round intermediate
calculations. Round your answer to 2 decimal places.)**

Maximum Price =

Answer #1

**Question
a:**

r = monthly interest rate = 12%/12 = 1%

n = 48 months

P = Monthly payment = $750

Maximum price = Down payment + [P * [1 - (1+r)^-n] / r]

= $1,600 + [$750 * [1 - (1+1%)^-48] / 1%]

= $1,600 + [$750 * 0.379739595 / 0.01]

= $1,600 + $28,480.4696

= $30,080.4696

Therefore, affordable macimum price is $30,080.47

**Question
b:**

r = monthly interest rate = 12%/12 = 1%

n = 60 months

P = Monthly payment = $750

Maximum price = Down payment + [P * [1 - (1+r)^-n] / r]

= $1,600 + [$750 * [1 - (1+1%)^-60] / 1%]

= $1,600 + [$750 * 0.449550384 / 0.01]

= $1,600 + $33,716.2788

= $35,316.2788

Therefore, affordable macimum price is $35,316.28

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?
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18787.33
25587.3
19526.21
22346.81

You have saved $5,000 for a down payment on a new car. The
largest monthly payment you can afford is $450. The loan will have
a 9% APR based on end-of-month payments.
What is the most expensive car you can afford if you finance it
for 48 months? Do not round intermediate calculations. Round your
answer to the nearest cent.
$
What is the most expensive car you can afford if you finance it
for 60 months? Do not round...

You have saved $3,000 for a down payment on a new car. The
largest monthly payment you can afford is $350. The loan will have
an 8% APR based on end-of-month payments.
What is the most expensive car you can afford if you finance it
for 48 months? Do not round intermediate calculations. Round your
answer to the nearest cent.
What is the most expensive car you can afford if you finance it
for 60 months? Do not round intermediate...

You have saved $3,000 for a down payment on a new car. The
largest monthly payment you can afford is $300. The loan will have
a 10% APR based on end-of-month payments.
A.What is the most expensive car you can afford if you finance
it for 48 months? Do not round intermediate calculations. Round
your answer to the nearest cent.
B. What is the most expensive car you can afford if you finance
it for 60 months? Do not round...

PV AND LOAN ELIGIBILITY
You have saved $4,000 for a down payment on a new car. The
largest monthly payment you can afford is $350. The loan will have
a 8% APR based on end-of-month payments.
What is the most expensive car you can afford if you finance it
for 48 months? Do not round intermediate calculations. Round your
answer to the nearest cent.
$
What is the most expensive car you can afford if you finance it
for 60...

PV AND LOAN ELIGIBILITY
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 8% APR based on end-of-month payments.
What is the most expensive car you can afford if you finance it
for 48 months? Do not round intermediate calculations. Round your
answer to the nearest cent.
What is the most expensive car you can afford if you finance it
for 60 months?...

You have saved $3,000 for a down payment on a new car. The
largest monthly payment you can afford is $300. The loan will have
a 9% 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.
Financed for 48 months: $
Financed for 60 months: $

You have saved $5,000 for a down payment on a new car. The
largest monthly payment you can afford is $350. The loan will have
a 9% 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.
Financed for 48 months: $ ___
Financed for 60 months: $ ___

You have saved $5,000 for a down payment on a new car. The
largest monthly payment you can afford is $500. 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.
Financed for 48 months: $
Financed for 60 months: $

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.

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