2. You are looking to buy a car and can afford to pay $200 per month....

Question

Question

2. You are looking to buy a car and can afford to pay $200 per month. If the interest rate

on a car loan is 0.75% per month for a 60-month loan, what is the most expensive car

you can afford to buy?

business finance

Answer 1

Answer #1

The most expensive car that can be bought is the PV of the maximum monthly installments of $200 over 60 months discounted at 0.75% per month.
=200(1.0075^60-1)/(0.00751.0075^60) =	$ 9,634.67

Answer 2

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