Question

Don James purchased a new automobile for $15,000. Don made a cash down payment of $3,750 and agreed to pay the remaining balance in 30 monthly installments, beginning one month from the date of purchase. Financing is available at a 24% annual interest rate. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: Calculate the amount of the required monthly payment. (Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.)

Answer 1

Answer:

The monthly payments are calculated below.

Explanation:

Total monthly instalments= 15,000-3,750

=11,250

Amount payable at 24% annual financing;

A=P (1+r/100)n

=11,250(1+24/100)30/12

=$642

FV=PV (1+r)n

i) FV=12,000*(1.08)16

= $41,111

 

ii) FV =16,000*(1.05)15

= $33,263

iii) FV =29,000*(1.11)12

= $101,455

iv) FV =49,000*(1.04)7

= $64,481