1. You decide to buy a new car. You negotiate with the dealerand get...

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Accounting

1. You decide to buy a new car. You negotiate with the dealerand get the car for $40,000. What will be your monthly payment ifyou finance the purchase through your bank with a 6-year, 11% autoloan (assume no down payment).
a. What if you made a down payment of $4,000? What would be themonthly payment for the car?

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3.6 Ratings (663 Votes)

1)

Monthly payment	=	Loan amount	/	Present value of annuity of 1
	=	$ 40,000	/	52.53735
	=	$ 761.36

Working:

Present value of annuity of 1	=	(1-(1+i)^-n)/i		Where,
	=	52.5373463		i	=	11%/12	=	0.009167
				n	=	6*12	=	72

2)

Monthly payment	=	Loan amount	/	Present value of annuity of 1
	=	$ 36,000	/	52.53735
	=	$ 685.23

Working:

Present value of annuity of 1	=	(1-(1+i)^-n)/i		Where,
	=	52.5373463		i	=	11%/12	=	0.009167
				n	=	6*12	=	72

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In: Accounting1. You decide to buy a new car. You negotiate with the dealerand get the...1. You decide to buy a new car. You negotiate with the dealerand get the car for $40,000. What will be your monthly payment ifyou finance the purchase through your bank with a 6-year, 11% autoloan (assume no down payment).a. What if you made a down payment of $4,000? What would be themonthly payment for the car?