My dream car costs $15,000 A) Calculate the monthly payments on your dream car if the...

My dream car costs $15,000

A) Calculate the monthly payments on your dream car if the annual interest rate is 4%, and the term of the loan is 5 years.

B) Calculate how much you would have to save every month to purchase your dream car in 5 years if your savings account pays 7% APR. Due to inflation, the cost of the car will increase by .5% per year over the next 5 years. (i.e. calculate the new 'F' value before the monthly payments A).

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

Please note - I considered inflation rate is 0.5% because there is point before 5 in above question If it is a typo error and inflation rate is 5% then just change cell "C10" i.e inflation rate with 5% to get your answer.

Hope this will help, please do comment if you need any further explanation. Your feedback would be appreciated.

jeff jeffy answered 2 days ago

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