A store finances a vehicle in 48 monthly installments of $499.00 at a rate of 18% per year Calculate the initial value of the vehicle



Answer to a math question A store finances a vehicle in 48 monthly installments of $499.00 at a rate of 18% per year Calculate the initial value of the vehicle

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To calculate the initial value of the vehicle, we need to find the present value of the 48 monthly payments of $499.00 each at an annual interest rate of 18%.

Using the formula for the present value of an ordinary annuity:

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

PV = present value,
PMT = monthly payment,
r = monthly interest rate,
n = number of periods.

PMT = ,
r = \frac{18\%}{12} = 0.18/12 = 0.015 (monthly interest rate),
n = 48 (number of payments).

Substitute the given values into the formula:



Answer: $16987.23

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