You want to buy a new car, but you can make an initial payment of only $2,000 and can afford monthly payments of at most $400. a. if the apr on auto loans is 12% and you finance the purchase over 48 months, what is the maximum price you can pay for the car? (do not round intermediate calculations. round your answer to 2 decimal places.)

Ans. The maximum price that you can pay for a car is $17,189.58

Explanation:

Hi, since the payments are going to be made every month, for 48 months at a 12% APR, all we need to do is convert this nominal fixed rate into an effective rate, that is by dividing by 12. It means that the rate of the loan is 1% effective monthly. With that in mind, let´s work on the following formula.

Everything should look like this

Now, let´s not forget that you actually have $2,000 cash more to buy the car, therefore, the car that you can buy, paying 400/month, at a 12% APR for 48 months can´t cost more than $17,189.58.

Best of luck

answer; /// blank(1); increases; blank(2); decreases;

answerattainable;