Question

Paige pays $532 per month for 5 years for a car. she made a down payment of $3,700.00. if the loan costs 7.1% per year compounded monthly, what was the cash price of the car?

Answer 1

Use the formula of the present value of annuity ordinary which is
Pv=pmt [(1-(1+r/k)^(-kn))÷(r/k)]
Pv present value?
PMT monthly payment 532
R interest rate 0.071
K compounded monthly 12
N time 5years
Pv=532×((1−(1+0.071÷12)^(−12
×5))÷(0.071÷12))
=26,803.15

So the cash price of the car including down payment is
26,803.15+3,700
=30,503.15...answer