Lupe made a down payment of 1800 toward the purchase of a ne

Lupe made a down payment of $1800 toward the purchase of a new car. To pay the balance of the purchase price, she has secured a loan from her bank at the rate of 11%/year compounded monthly. Under the terms of her finance agreement she is required to make payments of $200/month for 36 mo. What is the cash price of the car? (Round your answer to the nearest cent.)

Solution

He took loan $(1800 + x )

x(1 + 0.11/12)^36 = (200)(36)

or x(1.388878)=7200

x = 7200/(1.3888878)

x = 5184.03

Cash Price = $(5184.03+1800)

= $6984.03