You have saved $4,000 for a down payment on a new car. The largest monthly payment you can afford is $400. The loan will have a 12% APR based on end-of-month payments. What is the most expensive car you could afford if you finance it for 48 months? Round your answer to the nearest cent. $ What is the most expensive car you could afford if you finance it for 60 months? Round your answer to the nearest cent. $
You have saved $4,000 for a down payment on a new car. The largest monthly payment you can afford is $400. The loan will have a 12% APR based on end-of-month payments.
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What is the most expensive car you could afford if you finance it for 48 months? Round your answer to the nearest cent.
$ -
What is the most expensive car you could afford if you finance it for 60 months? Round your answer to the nearest cent.
$
As per the given information:
Down payment on a new car - $4,000
Monthly payment - $400
APR - 12% based on end-of-month payments
To determine:
- The most expensive Car that can be affordable if financed for 48 months.
- The most expensive Car that can be affordable if financed for 60 months.
Down payment=$4,000
Monthly payment=$400
APR=12%
Monthly interest rate=(12%/12) = 1%
Part 1:
Number of months=48 months
Present value factor=
Maximum loan possible= Monthly payment x Present value factor
Maximum possible loan= $400 x 37.973959493 =$15,189.5837972
Maximum price of a car that can purchase=Down payment + maximum possible loan
Maximum price of a car that can be purchased = $4000+$15,189.5837972
=$19,189.5837972
Maximum price of a car that can be purchase=$19,189.5837972 or $19,189.58
Part 2:
Number of months=60
Present value factor =
Maximum price of the car that can be purchased = 44.955038406 x $400+$4000
=$21,982.0153624 or $21,982.02
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