Question

12) Kiran bought a car for $17,200. He financed the vehicle with a 36-month auto loan through the dealership, at an interest rate of 3% APR. a) What will be his monthly payments on the loan? b) What is the total amount he would have paid for the car at the end of the 36 months? 13) An investment offers the following year-end cash flows: End of year Cash Flow $20,000 $30,000 $15,000 What is the present value of this cash flow stream at a discount rate of 15%?

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Answer 1

12:

Using financial calculator

Input:

PV= 17200

N= 36

I/Y = 3%/12 = 0.25%

Find Monthly payment = PMT=$500.20

B: Total amount paid = Number of months*Monthly payment

= 36* 500.2

=$ 18,007.09

12: Present value = CF1/(1+r)^1 + CF2/(1+r)^2 + CF3/(1+r)^3

= 20000/1.15^1 + 30000/1.15^2 + 15000/1.15^3

=49938.36

Cash flows as follows