In our readings, we studied Craig's decision to buy a car. Craig knows the following two Excel commands that he used during the Quantitative Reasoning Process: PMT(rate, nper, PV, FV) FV(rate, nper, pmt, PV)   In step3 of the Quantitative Reasoning Process, quantitative tools, Craig used the following command in Excel: =PMT(0.04/12, 7*12, -5000, 0) The Excel output for this command was $68.34. Which of the following best describes what this output represents?   1   If Craig saves $405.85 per year in an account paying 0.04% interest he will be able to buy a $5000 car in 84 years. 2   If Craig saves $68.34 per month in an account paying 4% interest he will be able to buy a $5000 car in 7 years. 3   The monthly payment on a car loan of $5000, with an interest rate of 0.04% for 84 months, will be $68.34. 4   The monthly payment on a car loan of $5000 with an interest rate of 4% for 7 years will be $68.34. 5   The monthly payment on a car loan of $5000, with an interest rate of 0.33% for 7 years, will be $68.34 times 12 (or $820.08 per month).

A First Course in Probability (10th Edition)
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ISBN:9780134753119
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Chapter1: Combinatorial Analysis
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In our readings, we studied Craig's decision to buy a car. Craig knows the following two Excel commands that he used during the Quantitative Reasoning Process:

PMT(rate, nper, PV, FV)

FV(rate, nper, pmt, PV)

 

In step3 of the Quantitative Reasoning Process, quantitative tools, Craig used the following command in Excel:

=PMT(0.04/12, 7*12, -5000, 0)

The Excel output for this command was $68.34. Which of the following best describes what this output represents?

 

1  

If Craig saves $405.85 per year in an account paying 0.04% interest he will be able to buy a $5000 car in 84 years.

2  

If Craig saves $68.34 per month in an account paying 4% interest he will be able to buy a $5000 car in 7 years.

3  

The monthly payment on a car loan of $5000, with an interest rate of 0.04% for 84 months, will be $68.34.

4  

The monthly payment on a car loan of $5000 with an interest rate of 4% for 7 years will be $68.34.

5  

The monthly payment on a car loan of $5000, with an interest rate of 0.33% for 7 years, will be $68.34 times 12 (or $820.08 per month).

 

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