You can afford a $350 per month car payment. You've found a 3 year loan at 6% interest. How big of a loan can you afford? %24

Intermediate Algebra
19th Edition
ISBN:9780998625720
Author:Lynn Marecek
Publisher:Lynn Marecek
Chapter2: Solving Linear Equations
Section2.2: Use A Problem Solving Strategy
Problem 2.53TI: Eduardo noticed that his new car loan papers stated that with a 7.5% simple interest rate, he would...
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You can afford a $350 per month car payment. You've found a 3 year loan at 6% interest.How big of a loan can you afford?

You can afford a $350 per month car payment. You've found
a 3 year loan at 6% interest. How big of a loan can you
afford?
$
%24
Transcribed Image Text:You can afford a $350 per month car payment. You've found a 3 year loan at 6% interest. How big of a loan can you afford? $ %24
Expert Solution
Step 1

Monthly payment is R= $350

Monthly interest rate is i=0.0612=0.005

Number of payments=n=12×3=36

The amount of loan is evaluated by using following formula.

A=R(1+i)n-1i(1+i)n

 

 

Step 2

Substitute the values

A=350(1+0.005)36-10.005(1+0.005)36A=350(1.005)36-10.005(1.005)36=11,504.86

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