document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1198910>Question 1198910</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Suppose you can afford to pay $ 325 a month for 9 years towards a new car with no down payment. If the current interest rates are 4.75%, how expensive a car can you afford?<BR>\n" );
document.write( "Car sticker price = </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #832576 by </B><A HREF=/tutors/aboutme.mpl?userid=ikleyn><B>ikleyn(52787)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=ikleyn><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=ikleyn><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=832576\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> .<BR>\n" );
document.write( "Suppose you can afford to pay $ 325 a month for 9 years towards a new car <BR>\n" );
document.write( "with no down payment. If the current interest rates are 4.75%, how expensive <BR>\n" );
document.write( "a car can you afford?<BR>\n" );
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document.write( "It is a classic Ordinary Annuity saving plan. The general formula is \r\n" );
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document.write( "    FV = <IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=P%2A%28%28%281%2Br%29%5En-1%29%2Fr%29 ALIGN=MIDDLE  ALT=\"P%2A%28%28%281%2Br%29%5En-1%29%2Fr%29\"   DISABLED_style= \"max-width:90%; height:auto;\" >,    (1)\r\n" );
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document.write( "where  FV is the future value of the account;  P is your monthly payment (deposit); \r\n" );
document.write( "r is the monthly percentage yield presented as a decimal; \r\n" );
document.write( "n is the number of deposits (= the number of years multiplied by 12, in this case).\r\n" );
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document.write( "Under the given conditions, P = 325;  r = 0.0475/12;  n = 12*9 = 108.  So, according to the formula (1), you get at the end of the 20-th year\r\n" );
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document.write( "    FV = <IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=325%2A%28%28%281%2B0.0475%2F12%29%5E%2812%2A9%29-1%29%2F%28%280.0475%2F12%29%29%29 ALIGN=MIDDLE  ALT=\"325%2A%28%28%281%2B0.0475%2F12%29%5E%2812%2A9%29-1%29%2F%28%280.0475%2F12%29%29%29\"   DISABLED_style= \"max-width:90%; height:auto;\" > = <IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=325%2A%28%28%281%2B0.0475%2F12%29%5E108-1%29%2F%28%280.0475%2F12%29%29%29 ALIGN=MIDDLE  ALT=\"325%2A%28%28%281%2B0.0475%2F12%29%5E108-1%29%2F%28%280.0475%2F12%29%29%29\"   DISABLED_style= \"max-width:90%; height:auto;\" > = $43690.32.\r\n" );
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document.write( "Note that you deposit only  12*9*$325 = $35,100.  The rest is what the account earns/accumulates in 9 years.\r\n" );
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document.write( "On Ordinary Annuity saving plans, &nbsp;see the lessons\r<BR>\n" );
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document.write( "&nbsp;&nbsp;&nbsp;&nbsp;- <A  rel=nofollow HREF=http://www.algebra.com/algebra/homework/Sequences-and-series/Ordinary-Annuity-saving-plans-and-geometric-progressions.lesson>Ordinary Annuity saving plans and geometric progressions</A>\r<BR>\n" );
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document.write( "&nbsp;&nbsp;&nbsp;&nbsp;- <A  rel=nofollow HREF=https://www.algebra.com/algebra/homework/Sequences-and-series/Solved-problem-on-Ordinary-Annuity-saving-plans.lesson>Solved problems on Ordinary Annuity saving plans</A>\r<BR>\n" );
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document.write( "in this site.\r<BR>\n" );
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document.write( "The lessons contain &nbsp;EVERYTHING &nbsp;you need to know about this subject, &nbsp;in clear and compact form.\r<BR>\n" );
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document.write( "When you learn from these lessons, &nbsp;you will be able to do similar calculations in semi-automatic mode.\r<BR>\n" );
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