SOLUTION: Dan is contemplating trading in his car for a new one. He can afford a monthly payment of at most $300. If the prevailing interest rate is 4.4%/year compounded monthly for a 48-mon

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Question 1200938: Dan is contemplating trading in his car for a new one. He can afford a monthly payment of at most $300. If the prevailing interest rate is 4.4%/year compounded monthly for a 48-month loan, what is the most expensive car that Dan can afford, assuming that he will receive $7000 for his trade-in? (Round your answer to the nearest cent.)
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
he can get a loan for as much as 13,181.89.
with 7,000 he received for selling his old car to the dealer, he can afford a car that costs as much as 20,181.89.


the calculations to find the present value of the monthly payments at the end of each month for 48 months is shown below:



calculator used is at https://arachnoid.com/finance/

payments are made at the end of each month.
interest rate per month is equal to 4.4% / 12 = .36666...%
payments are negative becauwe it's money going out.
present value of payment is positive becuase it's money coming in.