Question

A car agency in Mobile Expo offers a new car for a premium of ¢1,100,000 and 84 monthly payments of ¢250,000 each. If an interest rate of 36% ACM is charged, find the cash value of the car.

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Answer to a math question A car agency in Mobile Expo offers a new car for a premium of ¢1,100,000 and 84 monthly payments of ¢250,000 each. If an interest rate of 36% ACM is charged, find the cash value of the car.

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Santino
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102 Answers
To find the present value of the annuity, we use the formula:

PV = P \times \left(1 - (1 + r)^{-n}\right) / r

Given:
- P = ₡250,000
- r = \frac{36\%}{12} = 0.03 (monthly interest rate)
- n = 84

Substitute the values into the formula:

PV = 250,000 \times \left(1 - (1 + 0.03)^{-84}\right) / 0.03

Calculate:
PV = 250,000 \times \left(1 - 1.03^{-84}\right) / 0.03 \approx ₡7,637,521.39

The total cash value of the car is the sum of the present value of the annuity and the initial premium:
₡7,637,521.39 + ₡1,100,000 = ₡8,737,521.39

Therefore, the cash value of the car when the financing option is chosen is approximately ₡8,737,521.39.

\boxed{₡8,737,521.39}

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