You are considering buying a car for $25,100. The car dealership charges 2.99% APR compounded monthly on a 60-month loan. If you can afford a monthly payment of $450.00, how much can you borrow? How much do you need for a down payment? Thank you for help.
This is the formula you would use to find the amount of loan that you can afford.
PV=P{[1 + R]^N - 1 / [1 + R]^N} / R
PV=450{[1 + 0.0299/12]^60 - 1 / [1 + 0.0299/12]^60} / [0.0299/12]
PV=$450 x 55.6661234212.........
PV=$25,049.76 - The amount of loan you can afford
$25,100 - $25,049.76 =$50.24 Your down payment on car loan !!.
