Question

the cost of an automobile is $9,000 and after a period of three years it will have an estimated salvage value of $5,200. a down payment of $1,000 will be used to purchase the car. it is desired to make the monthly payments, at 12% interest, a value such as to reduce the unpaid balance to exactly the amount of the salvage value after three years. what is the amount of the monthly payment?

Answer 1

Salvage fee is the expected book fee of an asset after depreciation is complete, primarily based totally on what a corporation expects to get hold of in alternate for the asset on the quit of its beneficial life.

The required details for  salvage value in given paragraph

Value of Factors given in query are wrong, accurate values are given below

(P/F,1%,36) = zero.698925

(A/P,1%,36) = zero.033214

Loan amount = 9000 -1000 = 8000

Present really well worth of salvage fee = 5200*(P/F,1%,36) = 5200 * zero.698925 = 3634.41

Required mortgage to be repaid over three yrs = 8000 - 3634.41 = 4365.59

Monthly payment = 4365.59 * (A/P,1%,36) = 4365.59 * zero.033214 = 144.9987 ~ 145.

An expected salvage fee may be decided for any asset that a corporation can be depreciating on its books over time. Every corporation may have its very own requirements for estimating salvage fee. Some agencies might also additionally select to constantly depreciate an asset to $zero due to the fact its salvage fee is so minimal. It is primarily based totally at the fee a corporation expects to get hold of from the sale of the asset on the quit of its beneficial life.

In a few cases, salvage fee might also additionally simply be a fee the corporation believes it is able to achieve with the aid of using promoting a depreciated, inoperable asset for parts.

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