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Tony has decided to purchase a car. The car cost $30,000 today. However, Tony does not...

Tony has decided to purchase a car. The car cost $30,000 today. However, Tony does not have $30,000. He can get a five-year loan from his credit union to purchase the car. If he takes the loan, he will need to pay the credit union $542.40 for 60 months. Tony decides to go to the credit union and pick up the check. Then he will go to the dealer and pick up his new automobile.

Your financial calculator has three buttons for dollar amounts:

Present Value (PV)

Payment (PMT)

Future Value (FV)

For this problem, which of these three buttons will be used and for what amounts? Explain.

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Homework Answers

Answer #1

Calculating Interest Rate,

Using TVM Calculation,

I = [PV = 30,000, FV = 0, PMT = -542.40, N = 60]

I = 3.25%

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