You are looking to buy a car. You can afford $440 in monthly payments for four y

Question

You are looking to buy a car. You can afford $440 in monthly payments for four years. In addition to the loan, you can make a $1,100 down payment. If interest rates are 7.25 percent APR, what price of car can you afford? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

You are looking to buy a car. You can afford $440 in monthly payments for four years. In addition to the loan, you can make a $1,100 down payment. If interest rates are 7.25 percent APR, what price of car can you afford? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Explanation / Answer

PV of the affordable monthly payments = 440*((1+0.0725/12)^48-1))/((0.0725/12)*(1+0.0725/12)^48)) = $ 18,285.79 Add: Down payment $   1,100.00 Affordable price of the car $ 19,385.79

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