Answer:
The correct option is a. $15,198.
Explanation:
This can be calculated using the formula for calculating the present value of an ordinary annuity as follows:
PV = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (1)
Where;
PV = Present value of the loan or the largest loan amount that can be gotten =?
P = Monthly payment = $350
r = Monthly interest rate = APR / 12 = 5% / 12 = 0.05 / 12 = 0.00416666666666667
n = number of months = 4 years * 12 months = 48
Substitute the values into equation (1) to have:
PV = $350 * ((1 - (1 / (1 + 0.00416666666666667))^48) / 0.00416666666666667)
PV = $350 * 43.4229559379367
PV = $15,198.0345782779
Rounding to a whole dollar amount, we have:
PV = $15,198
Therefore, the correct option is a. $15,198.
