Mr. Jones plans to purchase a new $18000 automobile. He wants to borrow all the

Question

Mr. Jones plans to purchase a new $18000 automobile. He wants to borrow all the money for the car, and repay it in equal monthly installments over a 5-year period. The nominal interest rate is 11% per year, compounded continuously. What will be Mr. Jones's monthly payment? The maintenance cost of the car for the first five years are: $200, $300, $400, $500, and $600. How much should Mr. Jones put in the bank today to cover the maintenance of the car for the five years? Assume that the bank gives 8% interest, compounded annually.

Explanation / Answer

$399.16 Total monthly payment untill march:2014, $391.36 total monthly payment after march 2014, $23,598.82 total of 60 payments, Dec,2017 payoff date

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