Suppose your car loan for 36 months has a monthly payment of $425. Immediately after the 30th payment, you want to pay the remaining balance in a lump sum. What lump sum amount must you pay if your interest is 4% compounded continuously?

Suppose your car loan for 36 months has a monthly payment of $425. Immediately after the 30th payment, you want to pay the remaining balance in a lump sum. What lump sum amount must you pay if your interest is 4% compounded continuously?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Question

100%

Suppose your car loan for 36 months has a monthly payment of $425. Immediately
after the 30th payment, you want to pay the remaining balance in a lump sum. What
lump sum amount must you pay if your interest is 4% compounded continuously?
$7,977
$8,827
O$8,035
$2,277
$2,228

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