Phil can afford $150 a month for 6 years for a car loan. If the interest...

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Phil can afford $150 a month for 6 years for a car loan. If the interest rate is 5.1 percent compounded monthly, how much can

Answer 1

Answer #1

This question requires application of PV of annuity formula, according to which

PV =

[1-(4+5)-) [1-(1+r)-n LT P= Periodic Payment r=rate per period n = number of periods

r = 5.1%/12 = 0.425% (monthly), n = 6 * 12 = 72 months, P = $150

PV = 150 * 1-(1+0.00425) - 72 0.00425

PV = 150 * 61.9143

PV = $9,287.14

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Answer 2

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