Question
Daisy wants to purchase a car. She secures an auto loan at 4.5% annual interest. Her budget allows her to pay about $450 a month over the next 3 years. What price auto can she afford?
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Answer to a math question Daisy wants to purchase a car. She secures an auto loan at 4.5% annual interest. Her budget allows her to pay about $450 a month over the next 3 years. What price auto can she afford?
Andrea
4.586 Answers
1. Identify the monthly payment, interest rate, and loan period:
R = 450
r = \frac{4.5}{100 \times 12} = 0.00375
n = 3 \times 12 = 36
2. Apply the loan payment formula for the present value:
P = \frac{R (1 - (1 + r)^{-n})}{r} = \frac{450 (1 - (1 + 0.00375)^{-36})}{0.00375}
Therefore, the price of the auto Daisy can afford is:
P=15127.61
2. Apply the loan payment formula for the present value:
Therefore, the price of the auto Daisy can afford is:
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