Question

Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced.You can get a car loan with a term of three years at an APR of 3%. If you can afford a monthly payment of $250, how much can you borrow? (Round your answer to the nearest cent.)

Answer 1

He can borrow $ 8256.88 when the interest rate is 3 % and he can afford a monthly payment of $ 250.

Time period = 3 years

T = 3 × 12 months

T = 36 months

Amount = $ 250 × 36 = $ 9,000

Interest rate = 3 %.

Let the principal amount be x.

So, ATQ, we get that:

x + 3% x (3) = 9,000

x + 0.09 x = 9,000

1.09 x = 9000

x = 8256.88

Therefore, he can borrow $ 8256.88 when the interest rate is 3 % and he can afford a monthly payment of $ 250.

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