A car may be purchased with a $3500 down payment now and 72 monthly payments of $480. If interest rate is 12% compounded monthly, what is the price of the car?
3 answers
Price = 3500 + (480*72) =
P = 3500 + (480*72) = 38,060.
P = Po(1+r)^n = 38,060,
r = 0.12/12 = 0.01/mo., n = 72 Compounding periods.
Po(1.01)^72 = 38,060, 2.047Po = 38,060, Po = $18,592.16. = Price of car.
P = Po(1+r)^n = 38,060,
r = 0.12/12 = 0.01/mo., n = 72 Compounding periods.
Po(1.01)^72 = 38,060, 2.047Po = 38,060, Po = $18,592.16. = Price of car.
The Equation used most often for home and auto loans:
P = Po*r*T/(1-(1+r)^-T)
(Po*0.01*72)/(1-1.01^(-72)) = 38,060, 0.72Po/0.51150 = 38,060,
1.41Po = 38,060, Po = $27,038.67.
= Cost of car.
P = Po*r*T/(1-(1+r)^-T)
(Po*0.01*72)/(1-1.01^(-72)) = 38,060, 0.72Po/0.51150 = 38,060,
1.41Po = 38,060, Po = $27,038.67.
= Cost of car.
1 answer