tori is planning to buy a car. the maximum payment she can make is $3400 per year, and she can get a car loan at her credit union for 7.3% interest. Assume her payments will be made at the end of each year 1-4. If tori old car can be traded in for 3325 which is her down payment what is the most expensive car she can purchased

Question

Valeria

Engineering

19 August, 08:29

tori is planning to buy a car. the maximum payment she can make is $3400 per year, and she can get a car loan at her credit union for 7.3% interest. Assume her payments will be made at the end of each year 1-4. If tori old car can be traded in for 3325 which is her down payment what is the most expensive car she can purchased

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Chelsea Mack · Answer 1

PV of installments

= 3400 / (1+7.3%) + 3400 / (1+7.3%) ^2 + 3400 / (1+7.3%) ^3 + 3400 / (1+7.3%) ^4

= 11438.95

PV of old car sales = downpayment = 3324

Total PV = 3325 + 11438.95 = 14763.95

The most expensive car Tori can buy is of 14,763.95