You are looking to buy a car. You can afford $650 in monthly payments for five...

You are looking to buy a car. You can afford $650 in monthly payments for five years. In addition to the loan, you can make a $750 down payment. If interest rates are 8 percent APR, what price of car can you afford (loan plus down payment)? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Expert Solution

Information provided:

Monthly payment= $650

Time= 5 years*12= 60 months

Interest rate= 8%/12= 0.6667% per month

The present value is calculated by entering the below in a financial calculator:

PMT= 650

N= 60

I/Y= 0.6667

Press the CPT key and PV to compute the present value.

The value obtained is 32,056.9817.

The price of the car I can afford is: Loan + Down [payment

= $32,056.98 + $750

= $31,306.98.

In case of any query, kindly comment on the solution

jeff jeffy answered 3 months ago

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