Question

Can someone help me with this accounting question? I'm not sure how to approach it.

Dave Krug finances a new automobile by paying $5,700 cash and agreeing to make 10 monthly payments of $580 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 PVA factor to 4 decimal places.) Answer is complete but not entirely correct. Present Monthly Payment Value of Table Factor Loan 580 7,601.36 3.1058 Table Values are Based on: 1 x n 12%X Present Value of Cash Down Payment Cost of the Automobile Loan $ $ 5,700 7,601.36 13,301.36

Answer 1

Monthly payment		Table Factor		Present value of Loan
580	X	9.47130	=	5493.35
Table values are based on:
n	=	10
i	=	1%
Present value of Loan		Cash down payment		Cost of the automobile
5493.35	+	5700	=	11193.35
Workings:
i= 12%/12 = 1%
Table Factor	9.47130	=(1-(1.01)^-10)/0.01