Ask Question
13 December, 07:06

Olivia is willing to pay $185 a month for four years for a car payment. if the interest rate is 4.9 percent, compounded monthly, and she has a cash down payment of $2,500, what price car can she afford to purchase?

+4
Answers (1)
  1. 13 December, 07:28
    0
    Let x = the price of the car that Olivia can afford.

    Down payment = $2,500

    Remaining amount to be financed is P = x - 2500.

    Total payments should equal the monthly payments.

    The total payment over 4 years (48 months) is

    A = $185*48 = $8,880

    The rate is r = 4.9% = 0.049.

    The compounding interval is n = 12.

    The time is t = 4 years.

    The amount financed is P = $ (x - 2500).

    Therefore

    (x - 2500) (1 + 0.049/12) ⁴⁸ = 8880

    1.216 (x - 2500) = 8880

    x - 2500 = 7302.63

    x = 9802.63

    Olivia can afford a car priced at $9,802.63.

    Answer: $9,802.63
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Olivia is willing to pay $185 a month for four years for a car payment. if the interest rate is 4.9 percent, compounded monthly, and she ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers