Answering the questions Essay Example

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FV= PV * (1.00 + i)n = 1000*(1 +0.08) = 1080

FV= PV * (1.00 + i)= 1000*(1 +0.04)2 = 1,081.6

i=(1+rm)m−1

i=(1+0.0812)12−1

I=i×100=8.3%

1000/((1.10)^25)

=1000/10.8347

  1. You have budgeted $450 per/month to purchase an automobile. You can obtain a 4-year new car loan for 12% (Annual Percentage Rate, APR). Assuming that you must finance the entire purchase price, what is the most that you can spend on the new car and stay within budget?

450 *12 *1.12 *4

= $24,192

P/F * 5 *0.08 = 0.6806

P/F *5*0.09 = 0.6499 => discount rate to break even

No, it is not going to be a profit.

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