Find the present value of the annuity. assume that all interest rates are annual rates.
if peter can afford car payments of $245 per month for 5 years, what is the price of a car that he can afford now? assume an interest rate of 8%.
o a. $18.701.83
ob. 518,001.83
o c. $18,551.93
od. $17,933.73

  $12,083.02

Step-by-step explanation:

The annuity formula is ...

  A = P(r/12)/(1 -(1 +r/12)^(-12t))

Where P is the present value, r is the annual rate, and t is the number of years. A is the monthly payment.

For your numbers, you have ...

  $245 = P(.08/12)/(1 -(1 +.08/12)^(-12·5)) = P·0.0202763943

  P = $245/0.0202763943 = $12,083.02

The answer choices match payment periods between 8 and 9 years. At 245 per month for 5 years, the sum of payments is only $14,700, so the loan amount must be less than that.

This is a good one to ask your teacher about.

if im undersanding the question correctly, its organized from 10

step-by-step explanation:

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