Question

an online lending service recently offered 48 month auto loans at 4.5% compounded monthly. if you can afford the payments of $521 how much can you borrow? what is the total interest?

Answer 1

well, i have a formula ....

Answer 2

that would help, thanks again! youre a life saver....

Answer 3

\[Bk^n=P\frac{1-k^n}{1-k}\]
solving for B is simple enough

k is our compounding interest stuff (1+ i/12)

and n is the number of compounding periods, 48

Answer 4

Welcome SNHU student. I am great fan of your school and your president, Paul Leblanc.

Answer 5

Oh hi Preetha, it's a pretty good school... a little fast paced, but nice!

Answer 6

how accurate does our amount need to be?

Answer 7

two decimal places

Answer 8

http://www.wolframalpha.com/input/?i=521%281-%281%2B.045%2F12%29%5E%2848%29%29%2F%28%281%2B.045%2F12%29%5E%2848%29%281-%281%2B.045%2F12%29%29%29

well, if they expect you to use future value and present value tables, this isnt going to be ot their standards, but its more accurate

Answer 9

the interest is just the total amount of payment, minus the amount of the loan.

48P = interest + principal

Answer 10

oh :) thanks!

Answer 11

the basic formula i use for most financial questions is:
\[B_n=Bk^n-P\frac{1-k^n}{1-k}\]
for n compounding periods, and some k compounding interest setup

we can solve for payments, and B_o which is just B in the setup

Answer 12

we can solve for n, and such as well ... its pretty handy

Answer 13

do you have time to walk me through one ore question?

Answer 14

if you buy a computer directly from the manufacturer for $3,099 and agree to repay it in 48 equal installments at 1.79% interest per month on the unpaid balance, how much are your monthly payments? how much total interest will be paid?

Answer 15

Don't forget to medal Amistre

Answer 16

i believe i did

Answer 17

Thanks.

Answer 18

yep! thank you guys!!!!