Question

a car dealership offers you no money down on a. new car you may pay for the car for 5years by equal monthly end of the month payments of $574 each with the first paymwnt to be made one month from today .if thr discoubt annul rate is 17.42 percent compounded monthly what is the present value of the car payments?round the answer to two decimal places

Answer 1

Value of car payments = Present value of all the monthly payment discounted at monthly rate.

Monthly Payment = 574

Number of payments = 60

FV = 0

Monthly Rate = 17.42/12%

Value of car = 574/(1+0.1742/12)^1 +574/(1+0.1742/12)^2 +574/(1+0.1742/12)^3 +574/(1+0.1742/12)^4 +574/(1+0.1742/12)^5 +574/(1+0.1742/12)^6 +574/(1+0.1742/12)^7 +574/(1+0.1742/12)^8 +574/(1+0.1742/12)^9 + ...............574/(1+0.1742/12)^60

= 22887.71 Answer

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