Question

Dave Krug finances a new automobile by paying $7,000 cash and agreeing to make 20 monthly payments of $550 each, the first payment to be made one month after the purchase. The loan bears interest at an annual rate of 12%. What is the cost of the automobile? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.)

Exercise B-9 Present value of an annuity LO P3 Dave Krug finances a new automobile by paying $7,000 cash and agreeing to make 20 monthly payments of $550 each, the first payment to be made one month after the purchase. The loan bears interest at an annual rate of 12%. What is the cost of the automobile? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Monthly Payment Table Factor Present Value of Loan Table Values are Based on: n = Present Value of Loan Cash Down Payment Cost of the Automobile

Answer 1

Monthly Payment	x	Table Factor	=	Present Value of Loan
550	x	18.0456	=	9925
Table value are based on
n	=	20
i	=	1%
Present value of Loan	+	Cash Down payment	=	Cost of the Automobile
9925	+	7000	=	$16,925