10. Bob can afford car payments of $365 per month for 5 years. If the annual...

10. Bob can afford car payments of $365 per month for 5 years. If the annual interest rate is 4.9%, how much money can he afford to borrow now?

A) $7,026,73

B) $15,880.60

C) $19,338.64

D) $19,819.16

E) $21,247.83

Expert Solution

PMT = $365
Nper = 5 * 12 = 60
Rate = 4.9% / 12
FV = 0

Borrowed amount can be calculated by using the following excel formula:
=PV(rate,nper,pmt,fv)
=PV(4.9%/12,60,-365,0)
= $19,388.64

Borrowed amount = $19,338.64 (Option C)

jeff jeffy answered 2 years ago

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