finance question

A car dealership offers you no money down on a new car. You may pay for the car for 4 years by equal monthly end-of-the-month payments of $386 each, with the first payment to be made one month from today. If the discount annual rate is 8.40 percent compounded monthly, what is the present value of the car payments?

PV=P{[1 + R]^N - 1.[1 + R]^-N} R^-1. This is the formula you use to calculate this:

The PV of all the 48 payments=$15,690.34. This is effectively the price of the car.

You can also use "Summation Formula" to get the same result, which is basically summing up the PV of 1st., 2nd, 3rd,...........48th payment:∑[386/1.007^(n+1), n=0 to 47]=$15,690.34.