SOLUTION: You can afford a $350 per month car payment. You've found a 5 year loan at 4% interest. How big of a loan can you afford?

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Question 1111527: You can afford a $350 per month car payment. You've found a 5 year loan at 4% interest. How big of a loan can you afford?
Answer by josmiceli(19441) About Me  (Show Source):
You can put this solution on YOUR website!
Simple interest:
+I+=+P%2Ar%2At+
+I+=+P%2A.04%2A5+
+I+=+.2P+
------------------
+350%2A12%2A5+=+21000+
This is interest + principle
+I+%2B+P+=+21000+
+.2P+%2B+P+=+21000+
+1.2P+=+21000+
+P+=+17%2C500+
You can afford a $17,500 loan
-----------------------------
check:
+I+=+.2P+
+I+=+.2%2A17500+
+I+=+3500+
and
+I+=+P%2Ar%2At+
+3500+=+17500%2A.04%2A5+
+3500+=+17500%2A.2+
+3500+=+3500+
OK