Question

Brenna wants to buy a car that is available at two dealerships. The price of the car is the same at both dealerships. Best Buggies would let her make quarterly payments of $2,250 for 5 years at a quarterly interest rate of 3.82 percent. Her first payment to Best Buggies would be due immediately. If California Cars would let her make equal monthly payments of $920 at a monthly interest rate of 1.35 percent and if her first payment to California Cars would be in 1 month, then how many monthly payments would Brenna need to make to California Cars? Round your answer to 2 decimal places (for example, 2.89, 14.70, or 6.00).

Answer 1

First we have to find the price of the car/loan amount by using PV function in EXCEL

=PV(rate,nper,pmt,fv,type)

rate=3.82%

nper=number of periods=5*4=20 (4 quarters in a year)

pmt=2250

fv=0

type=1 (because the payments to made immediately)

=PV(3.82%,20,2250,0,1)

PV=32,258.39

Now use this loan amount to find the monthly payments using NPER function in EXCEL

=NPER(rate,pmt,pv,fv,type)

rate=1.35%

pmt=920

pv=32258.39

fv=0

type=0 (because payments made at the end of the period)

=NPER(1.35%,920,-32258.39,0,0)

NPER=47.82

It takes 47.82 monthly payments to repay the loan amount of 32258.39