putin489 putin489

11-03-2020
Business

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Todd can afford to pay $405 per month for the next 7 years in order to purchase a new car. The interest rate is 7.1 percent compounded monthly. What is the most he can afford to pay for a new car today

Respuesta :

andromache andromache

16-03-2020

Answer:

$26,747.48

Explanation:

In this question we use Present value formula that is shown in the attachment

Kindly find it below.

Given that,

Future value = $0

Rate of interest = 7.1% ÷ 12 = 0.59166%

NPER = 7 years × 12 = 84

PMT = $405

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the price paid for a new car today is $26,747.49

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