Question

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: $

Answer #1

**a. The amount is computed as follows:**

**Present value = Monthly payment x [ (1 – 1 / (1 +
r) ^{n}) / r ]**

**r is computed as follows:**

= 15% / 12

**= 1.25%**

**So, the amount will be as follows:**

= $ 500 x [ (1 - 1 / (1 + 0.0125)^{48} ) / 0.0125 ]

= $ 500 x 31.32693316

= $ 15,663.46658

**So, the amount will be as follows:**

= $ 15,663.46658 + $ 5,000

**= $ 20,663.47**

**b. The amount is computed as follows:**

**Present value = Monthly payment x [ (1 – 1 / (1 +
r) ^{n}) / r ]**

**r is computed as follows:**

= 15% / 12

**= 1.25%**

**So, the amount will be as follows:**

= $ 500 x [ (1 - 1 / (1 + 0.0125)^{60} ) / 0.0125 ]

= $ 500 x 42.03459179

= $ 21,017.2959

**So, the amount will be as follows:**

= $ 21,017.2959 + $ 5,000

**= $ 26,017.30**

**Feel free to ask in case of any query relating to this
question**

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: $ ___

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$
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largest monthly payment you can afford is $300. The loan will have
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Do not round intermediate calculations. Round your answers to the
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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...

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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 $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?...

10.
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 $500. 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...

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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...

Problem 5.26
PV AND LOAN ELIGIBILITY
You have saved $3,000 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.
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.
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