This issue has three parts.
You are considering the purchase of new car.
You have negotiated with the salesperson at the dealership and you can
purchase the vehicle for $30,000. You have $8,000 that you can use as a
Prior to going into the dealership, you have
set an absolute limit of $375 for the amount of monthly payments that
you can make on the car. You are willing to finance over five years but
you cannot exceed the payment of $375 per month. The dealer is willing
to offer you financing at an annual rate of 6.5% for a 5-year loan. The
dealer is willing to offer 5.5% financing on a 4-year loan.
CalculatorWeb's loan calculator
lets you specify any single item to calculate if the other four
variables are specified. The value should be entered as whole numbers
1. Can you meet your payment restriction and finance the amount required for the car?
2. What is the maximum amount that you can borrow to meet your payment restriction if the loan is to be paid off in 5 years?
3. Suppose that you are limited to paying $375 per month but you want to pay the loan off in 4 years and not 5 years. What is th