Problem 2-Buying a Car You see a car that you absolutely must have. The price tag...

Question

Question

Answer 1

Answer #1

Solution Rate per month = 6.99%/12 = 0.5825%

Total number of payments in 4 years = 12*4 = 48

The maximum amount of installment = $250

So present value of the 48 installments of $250 =

= 250* P/A(0.5825%,48) = 250*41.7683 = $10442.073

Therefore the amount need to borrow = $10442

The down payment we need to make = $18450 - $10442 = $8008

Answer 2

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