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9.) Matthew wants to take out a loan to buy a car. He calculates that he...

9.) Matthew wants to take out a loan to buy a car. He calculates that he can make repayments of $ 4,700 per year. If he can get a four​-year loan with an interest rate of 7​%, what is the maximum price he can pay for the​ car?
A.$19,104
B.$ 25,472
C.$15, 920
D.$ 22, 288

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Answer #1

Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=4700[1-(1.07)^-4]/0.07

=4700*3.38721126

=$15920(Approx).

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