Jennifer wants to buy a car 'today', and she has found a deal that requires no money down (i.e., no cash payment up-front) from a credit company. If she can afford to pay $800 per month and the monthly interest rate is 1% per month for a 3-year car loan,

i. What is the most expensive car she can afford to buy?

Hint 1. When you draw the timeline, be careful about the payment period and interest rate.

Hint 2. You pay the cost to the car company today with the loan from the credit company for which you should pay the regular amount (interests plus principal) for 12*3 months

6. Jennifer wants to buy a car 'today', and she has found a deal that requires no money down (i.e., no cash payment up-front) from a credit company. If she can afford to pay $800 per month and the monthly interest rate is 1% per month for a 3-year car loan,

ii. What would be the monthly payment for a car that costs $36,000 today?

Answer rating: 100% (QA)

i To find the most expensive car Jennifer can afford to buy we need to calculate the present value o... View the full answer