document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1167711>Question 1167711</A>: <I><SPAN STYLE=\"word-break: break-all;\"> You can afford a $450 per month car payment. You've found a 5-year loan at 6% interest. How big of a loan can you afford? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #792296 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=792296\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> the formula to use is:\r<BR>\n" );
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document.write( "pv = pmt * (1 - (1/(1+r)^n)/r\r<BR>\n" );
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document.write( "when pmt = 450 and r = .06/12 and n = 5*12, the formula becomes:\r<BR>\n" );
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document.write( "pv = 450 * (1 - (1/(1+.06/12)^(5*12)))/(.06/12) = 23,276.50 rounded to 2 decimal places.\r<BR>\n" );
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document.write( "i confirmed this is correct by using a financial calculator to get the same results.\r<BR>\n" );
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document.write( "the time periods involved are assumed to be months.\r<BR>\n" );
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document.write( "the interest rate per year is divided by 12 to get the interest rate per month.\r<BR>\n" );
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document.write( "the number of years is multiplied by 5 to get the number of months.\r<BR>\n" );
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document.write( "be careful of the parentheses.\r<BR>\n" );
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document.write( "they have to be there in the correct order and number.\r<BR>\n" );
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document.write( "to simplify the calculations, you can provide some of the calculations up front.\r<BR>\n" );
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document.write( "this is especially useful if you have multiple memory locations to store them in.\r<BR>\n" );
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document.write( "if not, then you can truncate the number of decimal places to 6 and should be able to get the same answer when rounded to 2 decimal places.\r<BR>\n" );
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document.write( "here's the same problem with the intermediate calculations truncated to 6 decimal places, if required.\r<BR>\n" );
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document.write( ".06/12 = .005<BR>\n" );
document.write( "5*12 = 60\r<BR>\n" );
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document.write( "the formula becomes:\r<BR>\n" );
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document.write( "p = 450 * (1-(1/(1+.005)^60))/.005 = 23,276.50 rounded to 2 decimal places.\r<BR>\n" );
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document.write( "the biggest problem is making sure you got the parentheses right.\r<BR>\n" );
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document.write( "your go to alternative is to use a financial calculator, if you're allowed to use them.\r<BR>\n" );
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document.write( "a financial calculator that i use online can be found at:\r<BR>\n" );
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document.write( "<a  rel=nofollow HREF= \"https://arachnoid.com/finance/index.html\" target = \"_blank\">https://arachnoid.com/finance/index.html</a>\r<BR>\n" );
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document.write( "inputs to this calculator would be:\r<BR>\n" );
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document.write( "fv = 0<BR>\n" );
document.write( "np = 5 years * 12 months per year = 60<BR>\n" );
document.write( "pmt = -450<BR>\n" );
document.write( "ir = 6% / 12 = .5 (calculator uses percent, not rate)<BR>\n" );
document.write( "payments are made at the end of each time period.\r<BR>\n" );
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document.write( "press pv and the calculator tells you that the present value is equal to 23,276.50.\r<BR>\n" );
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document.write( "you get the same answer with a lot less worry about whether you entered the problem correctly into your calculator.\r<BR>\n" );
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document.write( "even if you can't use a financial calculator, it's a good way to check whether you got the right answer or not.\r<BR>\n" );
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document.write( "here's a display of what the calculator looks like with your inputs and the result.\r<BR>\n" );
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document.write( "pmt was entered as negative because it's money going out.\r<BR>\n" );
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document.write( "pv was shown as positive because it's money coming in.\r<BR>\n" );
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document.write( " </SPAN>\n" );
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