Question

Derek borrows $42,412.00 to buy a car. He will make monthly payments for 6 years. The car loan has an interest rate of 5.39%. What will the payments be?

Derek borrows $36,990.00 to buy a car. He will make monthly payments for 6 years. The car loan has an interest rate of 6.12%. After a 16.00 months Derek decides to pay off his car loan. How much must he give the bank?

Derek plans to buy a $28,270.00 car. The dealership offers zero percent financing for 60.00 months with the first payment due at signing (today). Derek would be willing to pay for the car in full today if the dealership offers him $____ cash back. He can borrow money from his bank at an interest rate of 4.50%.

Answer 1

1)
Monthly Payment		=-PMT(rate,nper,pv,fv)
		= $690.74
Where,
rate	=	5.39%/12	=	0.004491667
nper	=	6*12	=	72
pv			=	$42,412.00
fv			=	0
2)
Amount to be paid to bank		$29,899.00
Working:
Monthly Payment		=-PMT(rate,nper,pv,fv)
		$615.13
Where,
rate	=	6.12%/12	=	0.0051
nper	=	6*12	=	72
pv			=	$36,990.00
fv			=	0
Loan Value after 16.00 months		=pv(rate,nper,pmt,fv)
		$29,899.00
Where,
rate	=	6.12%/12	=	0.0051
nper	=	72-16	=	56
pmt	=		=	$(615.13)
fv	=		=	0
3)
Cash back will be the difference of Value of car today and the discounted value of car today.
Cash Back	=	Value of Car Today	-	Discounted Value of Car today
	=	$28,270.00	-	$25,367.86
	=	$2,902.14
Working:
Monthly Payment	=	Cost of Car Today	/	Number of months
	=	$28,270.00	/	60
	=	$471.17
Present Value monthly payment		=pv(rate,nper,pmt,fv,1)
		$25,367.86
Where,
rate	=	4.50%/12	=	0.00375
nper			=	60
pmt			=	$(471.17)
fv			=	0