Question

Melanie can afford a $310-per-month car payment. If she is being offered a 5-year car loan with an APR of 3.0%, compounded monthly, what is the value of the most expensive car she can afford

Answer 1

Here is the answer
$17,252.23

Answer 2

Answer:

The most expensive car Melanie can afford is $17287.43

Step-by-step explanation:

The EMI formula is :

$\frac{p*r*(1+r)^{n} }{(1+r)^{n}-1 }$

Here we have to find the p

EMI = 310

r = $\frac{3}{100}$=0.03 $\frac{0.03}{12}= 0.0025$

n = $5\times12=60$

Putting values in the formula we get,

$310=\frac{p*0.0025*(1.0025)^{60} }{(1+r)^{60}-1 }$

$310=\frac{p*0.0025*1.162}{0.062}$

$50.22=0.002905p$

$p=17287.43$ dollars

The most expensive car Melanie can afford is $17287.43