Question 1160116: You can afford a $300 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! use a financial calculator similar to the one at https://arachnoid.com/finance/index.html
your inputs are:
future value = 0
number of periods = 3 years * 12 = 36 months
payment amount = -300 per month
interest rate = 4% per year / 12 = .33333333... per month.
payment is made at the end of each month.
click on PV (present value) to get the amount of loan you can borrow.
it will be $10,161.23
that's how big a loan you can get when you pay 300 dollars a month for 36 months at 4% per year compounded monthly.
if you entered the payment as negastive, the present value will be positive and vice versa.
you enter as negative since that's money going out.
the present value is money coming in and will therefore show as positive when the payment is entered as negative.
if you had entered the payment as positive, the present value will show as negative.
that's the way the calculator works.
no need to get into that further as long as you don't require more explanation.
you'll get the same present value, only the sign will be different.
try it your self and you'll see.
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