Monthly loan payments Personal Finance Problem Tim Smith is shopping for a used

Question

Monthly loan payments Personal Finance Problem Tim Smith is shopping for a used car. He has found one priced at $5,300. The salesman has told Tim that if he can come up with a down payment of $800, the dealer will finance the balance of the price at an annual rate of 12% over 4 years (48 months) (Hint: Use four decimal places for the monthly interest rate in all your calculations) a. Assuming that Tim accepts the dealer's offer, what will his monthly (end-of-month) payment amount be? b. Use a financial calculator or spreadsheet to help you figure out what Tim's monthly payment would be if the dealer were willing to finance the balance of the car pnce at an annual rate of 9%? a. Tim's monthly (end-of-month) payment amount is (Round to the nearest cent.) Round b Tim's monthly payment if the dealer were willing tofinance the balance of the car pnce at an annual rate of 9%, would be $ to the nearest cent.)

Explanation / Answer

Dear student Lests summaraise the question Cost of car 5300 Down payment 800 Total installment principle amount 4500 Period 48 months Interest 9% Interest per month = 9/12 0.75% Installment value= Intsallment * PVAF (0.75%, 48 months) 4500 installment * 40.18478 Intallment = 4500/40.18478 Installement 111.9827 present value 1 1.0075 0.992556 2 1.015056 0.985167 3 1.022669 0.977833 4 1.030339 0.970554 5 1.038067 0.963329 6 1.045852 0.956158 7 1.053696 0.94904 8 1.061599 0.941975 9 1.069561 0.934963 10 1.077583 0.928003 11 1.085664 0.921095 12 1.093807 0.914238 13 1.10201 0.907432 14 1.110276 0.900677 15 1.118603 0.893973 16 1.126992 0.887318 17 1.135445 0.880712 18 1.14396 0.874156 19 1.15254 0.867649 20 1.161184 0.86119 21 1.169893 0.854779 22 1.178667 0.848416 23 1.187507 0.8421 24 1.196414 0.835831 25 1.205387 0.829609 26 1.214427 0.823434 27 1.223535 0.817304 28 1.232712 0.81122 29 1.241957 0.805181 30 1.251272 0.799187 31 1.260656 0.793238 32 1.270111 0.787333 33 1.279637 0.781472 34 1.289234 0.775654 35 1.298904 0.76988 36 1.308645 0.764149 37 1.31846 0.758461 38 1.328349 0.752814 39 1.338311 0.74721 40 1.348349 0.741648 41 1.358461 0.736127 42 1.36865 0.730647 43 1.378915 0.725208 44 1.389256 0.71981 45 1.399676 0.714451 46 1.410173 0.709133 47 1.42075 0.703854 48 1.431405 0.698614 40.18478

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