70.2K

Verified Solution

Link Copied!

Suppose you have saved $3,000 for a down payment on a new car. The largest monthly payment you can afford is $350. The loan will have a 24% APR based on end-of-month payments. Using this information and a financial calculator, you want to determine the most expensive car you can afford if you finance it for 36 months. In order to do this, you need to determine the values for the following variables: - Ni number of payments - I/Yi periodic interest rate - PMT: payment - Fvi future value The number of payments will depend on how long you will finance the purchase. Enter the aporopriate value for W in the input row of the following table. You are told that the APR is 24% for this loan. However, the rest of the values for this problem are given in months, not years. This means there are periods per year, and the APR has to be divided by this number to determine the periodic rate. Enter the appropriate value for I/Y in the input row of the previous table. Enter the appropriate value for the monthy loan payment in the input row of the previous table. (Hint: You should enter the payment as a negative number so that the calculated value for present value will be positive.) For the remaining values in the previous table, the future value is going to be zero and the present value is what you're solving for to determine the loan amount. Using a financial calculator and the values in the previous table, compute the present value of this series of payments and enter it into the final row of the table. (Hint: Remember to hit " 2nd " and " FV to clear out the time value of money.) Therefore, the most expensive car you can afford to purchase with this loan and your $3,000 down payment is

Answer & Explanation Solved by verified expert

See Answer