You have decided to buy a used car. The dealer has offered you two options: (FV

Question

You have decided to buy a used car. The dealer has offered you two options: (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

Pay $530 per month for 20 months and an additional $10,000 at the end of 20 months. The dealer is charging an annual interest rate of 24%.

Make a one-time payment of $15,396, due when you purchase the car.

1-a. Determine how much cash the dealer would charge in option (a). (Round your final answer to nearest whole dollar.)

Present Value| ________

Explanation / Answer

Present value-Pay $530 per month for 20 months and an additional $10,000 at the end of 20 months.

Using Financial Calculator

I/Y=24

N=20

PMT=530

FV=10000

Press CPT +PV

PV=2313.82

Present value=2313.82

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