Auto Financing A consumer made a down payment of $2000 toward the purchase of a
ID: 3275416 • Letter: A
Question
Auto Financing A consumer made a down payment of $2000 toward the purchase of a new car. To pay the balance of the purchase price, she has secured a loan from her bank at the rate of 12% per year compounded monthly. Under the terms of her finance agreement, she is required to make payments of $210 each month for 36 months. What is the cash price of the car? What is the total amount paid for the balance of the car? (Include the down payment in your answers.) How much money would be saved by paying cash for the car? (Calculate by using Excel Formulas)
Explanation / Answer
Use the formula.
PV (rate, nper, pmt, [fv], [type])
PV = present value
Rate = rate of intrest
Nper= no. Of months
Pmt = payment made each period.
Fv = a cash balance you want to attain after the last payment is made.
Type= when payments are due, 0 at the end of period.
1 = beginning of the period
By default its 0
Cash price = present value + down payment of the car.
I have provided u with all the formulas needed because I do not have the access to my laptop now. Thanku.
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