You have decided to purchase a new car. The price of the new car is $30...
You have decided to purchase a new car. The price of the new car is $30 000. This balance can be financed by an auto dealer at 2.9% APR (annual percentage rate) with payments of 48 months. (APR is compounded monthly, no market value for the car by the end of 4 years period).
- Calculate how much would be the monthly payment.
- Draw the cash flow diagram (from your point of view).
- Assume that the APR is 8.9%, monthly payment is $663 and period is 48 months. What would be the car price in this condition?
NOTE: Do not use Excel, use the formulas of PW or FW or AW if required.
Homework Answers
a)
The monthly payment is calculated as follows:-
Monthly payment = $ 662.70
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b) The red bars represent the monthly payment and the blue bar represent the cash inflow in the form of loan .
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c)
The car price is calculated as follows
Price of the car = $26,693.42
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