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A person has a $500 monthly car payment, which is based on 12% annual interest, compounded monthly. Determine the amount of car bought if it was financed for 24 months and no down payment was paid.

Answer :

TomShelby

Answer:

The present value of the car whe it was purchase will be of $ 10,621.69

Explanation:

We need to sovle for the present value of an annuity given the PTM of $500 the interst rate off 12% compounded monthly and that time of the lona is 24 months:

[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]

C $500.00

time 24

rate 0.01 (12% = 0.12 er year / 12 months )

[tex]500 \times \frac{1-(1+0.01)^{-24} }{0.01} = PV\\[/tex]

PV $10,621.6936

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