SOLUTION: You can afford a $350 per month car payment. You've found a 3 year loan at 4% interest. How big of a loan can you afford?.

Question 1122739: You can afford a $350 per month car payment. You've found a 3 year loan at 4% interest. How big of a loan can you afford?.
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
payment at the end of each month is 350.
3 year loan = 36 months.
4% per year compounded monthly is .333333333333.....% per month.

calculator i used can be found at

inputs are:

present value = 0
future value = 0
number of time periods = 36 months
payment amount = -350 (negative because it's money going out)
interest rate percent per time period = 4/12 = .333333333% per month
payment is made at the end of each time period.

click on PV and the calculator tells you that the present value of the loan is equal to $11,854.77

that value is positive because it's money coming in.

present value is the amount of money that you can borrow when you pay 350 at the end of each month for 36 months at 4% interest rate per year compounded monthly.

here's the calculator display.

$$$

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