You have saved 4000 for a downpayment on a new car The large

You have saved $4,000 for a downpayment on a new car. The largest monthly payment you can afford is $350. The loan will have a 12% APR based on end-of-month payments. What is the most expensive car you can afford if you finance it for:

A) 48 months?

B) 60 months?

Remember that the amount of a loan has to be equal to the PV of loan payments. Assuming a 48-month loan… N=48 I/Y = 12/1 = 1 PMT = -350 FV = 0 CPT PV = 13,290.88 With $4,000, we can buy a car for $17,290.88 Now, assuming a 60-month loan… N=60 I/Y = 12/1 = 1 PMT = -350 FV = 0 CPT PV = 15,734.26 With $4,000, we can buy a car for $19,734.26

You have saved 4000 for a downpayment on a new car The large

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