Question

HELPPPP- you just got your driver's license. Your parents buy you a car and agree to let you pay them back over a period of 70 months. They charge 3.5% simple interest. Which price represents a car you could purchase if you wanted to keep your monthly payments below $400

Answer 1

Using the monthly payments formula, it is found that a car with a value of at most $25,293.

What is the monthly payment formula?

It is given by:

$A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}$

In which:

• P is the initial amount.

• r is the interest rate.

• n is the number of payments.

In this problem, we have that the parameters are given as follows:

A = 400, n = 70, r = 0.035.

Hence:

r/12 = 0.035/12 = 0.002917.

Then we have to solve for P to find the maximum value of the car.

$A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}$

$400 = P\frac{0.002917(1.002917)^{70}}{(1.002917)^{70}-1}$

$P = \frac{400[(1.002917)^{70}-1]}{0.002917(1.002917)^{70}}$

P = $25,293.

More can be learned about the monthly payments formula at https://brainly.com/question/26267630

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