Question 1206219
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You can afford a $300 per month car payment. You've found a 5 year loan at 8% interest.
What the maximum loan could be?
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<pre>
Use the formula for the monthly payment for a loan

    M = {{{P*(r/(1-(1+r)^(-n)))}}}


where P is the loan amount; r = {{{0.03/12}}} is the interest rate per month;
n is the number of payments (same as the number of months); M is the monthly payment.


From this formula, the expression for the maximum loan is

    P = {{{M/((r/(1-(1+r)^(-n))))}}}.


In this problem  M = $300;  r = {{{0.08/12}}},  n = 5*12 = 60 monthly payments.


Substitute these values into the formula and get for the maximim loan amount

    P = {{{300/(((0.08/12)/(1-(1+0.08/12)^(-60))))}}} = $14,795.53.


<U>ANSWER</U>.  The maximum loan amount is $14,795.53.
</pre>

Solved.