Question
In: Finance
A car may be purchased with $3,500 down payment now and 72 monthly payments of $489....
A car may be purchased with $3,500 down payment now and 72 monthly payments of $489. If the interest rate is 9% per year compounded monthly, what is the price of the car?
Solutions
Expert Solution
Ans $ 30628.18
| P = | Regular Payments |
| PV = | Loan Amount |
| r = | rate of interest |
| n = | no of periods |
| P = | r (PV) |
| 1 - (1 + r )^-n | |
| 489 = | (9%/12)*PV |
| 1 - (1 / (1 + 9%/12)^72)) | |
| 489 = | 0.0075 * PV |
| 0.416076365990435 | |
| PV = | 489 / 0.0075 * 0.416076365990435 |
| PV = | 27128.18 |
| Price = | Loan + Downpayment |
| 27128.18 + 3500 | |
| 30628.18 |
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