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bija089 [108]
3 years ago
7

You want to buy a new car, but you can make an initial payment of only $2,400 and can afford monthly payments of at most $500. a

. If the APR on auto loans is 12% and you finance the purchase over 48 months, what is the maximum price you can pay for the car?
Business
1 answer:
dlinn [17]3 years ago
7 0

Answer:

Ans. The maximum price you can pay for the car is $21,387

Explanation:

Hi, to find out what is the maximum price that you can pay, first we have to convert APR rate to an effective monthly rate, that is because you will make the payments in an monthly basis.

Therefore, the effective monthly rate of the credit is 12%/12 =1% effective monthly.

Now, let´s find out the maximum price of the car.

CarPrice=\frac{A((1+r)^{n}-1) }{r(1+r)^{n} } +DownPayment

Where: A is the amount of money that you can pay every month; r is 1% effective rate; n is the periods of periodic payment.

So, everything should look like this:

CarPrice=\frac{500((1+0.01)^{48}-1) }{0.01(1+0.01)^{48} } +2,400= 21,387

So, with a down payment of $2,400 and being able to pay $500 per month, the car that you can buy cannot have a price higher than $21,397.

Best of luck

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July 22 K. Tisdale $350

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To record the exchange of educational supplies for services.

July 31   Accounts Receivable      $1,470

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To record the Fees Earned during July.  

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J. Dunlop's Account

Date     Description                        Debit      Credit    Balance

July 21  Accounts Receivable        $115                       $115

K. Tisdale's Account

Date     Description                         Debit      Credit      Balance

July 22  Accounts Receivable        $350                       $350

July 27  Accounts Receivable        $300                       $650

July 27  Supplies                                            $300        $350

July 30  Accounts Receivable        $120                       $470

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Date     Description                         Debit      Credit    Balance

July 24  Accounts Receivable        $85                       $85

July 31   Accounts Receivable      $105                      $190

F. Mintz's Account

Date     Description                        Debit      Credit    Balance

July 27  Accounts Receivable       $225                       $225

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July 30  Accounts Receivable        $170                       $170

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Explanation:

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