1. The car dealer is offering a promotion on a new that the buyer pays zero interest over 72 months. The monthly payment is $350. The market interest rate for a 6-year car loan is 3.5%. What is the selling price of this car?

selling price of this car is $22700

Explanation:

given data

zero interest = 72 months

monthly payment = $350

market interest rate = 3.5% per year = 0.2917 % per month

time = 6 year = 72 months

solution

we get here present value of annuity that is

present value annuity = (0.2917 % per month, 72 months)

present value annuity = 64.8568

so here selling price of car is

selling price = monthly payment * present value annuity ... 1

selling price = $350 * 64.8568

selling price = $22700

so selling price of this car is $22700