Question

Don James purchased a new automobile for $28,000. Don made a cash down payment of $7,000 and agreed to pay the remaining balance in 30 monthly installments, beginning one month from the date of purchase. Financing is available at a 24% annual interest rate. (FV of $1, PV of $1, FVA of $1, PVA of $1, EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: Calculate the amount of the required monthly payment. (Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.) Monthly payment

Answer 1

Loan Amount = 28,000 - 7,000 = $21,000

Calculating Monthly Payment on Loan,

Using TVM Calculation,

PMT = [PV = 21,000, FV = 0, N = 30, I = 0.24/12]

PMT = $937.65

Monthly Payment = $937.65

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Answer 2

table used PVA of $1

PVA (n=30, i=2%) = 22.39646

21,000/22.39646= 937.6481819002