Question

Chuck can afford a $490-per-month car payment, and he's interested in either
a convertible, which costs $28,700, or a sports car, which costs $29,200. If he
is being offered a 6-year car loan with an APR of 6%, compounded monthly,
which car can Chuck afford?
​

Answer 1

Answer:

Chuck can afford both the convertible and sports car APEX

Step-by-step explanation:

Answer 2

Answer:

We can say that Chuck can afford both the cars.

Step-by-step explanation:

The EMI formula is :

$\frac{p*r*(1+r)^{n} }{(1+r)^{n}-1 }$

Case 1:

p = 28700

r = 6/12/100=0.005

n = 6*12=72

Putting the values in the above formula, we get:

$\frac{28700*0.005*(1.005)^{72} }{(1.005)^{72}-1 }$

Monthly payment is = $475.67

Case 2:

p = 29200

r = 6/12/100=0.005

n = 6*12=72

Putting the values in the above formula, we get:

$\frac{29200*0.005*(1.005)^{72} }{(1.005)^{72}-1 }$

Monthly payment is = $483.96

We can see that in both the cases, the monthly payments or EMI's are less than $490.

Therefore, we can say that Chuck can afford both the cars.