You want to buy a car but the price of $22000 is a bit steep. You are willing to put down $3000 and finance it over 5 years; however, you are restricted to no more than $325 per month. The interest rate is 6% per year. What is the price you can afford to pay for the car?

Question

You want to buy a car but the price of $22000 is a bit steep.  You are willing to put down $3000 and finance it over 5 years; however, you are restricted to no more than $325 per month.  The interest rate is 6% per year.  What is the price you can afford to pay for the car?

bobpursley · Answer

what is the present value of 325 for 60 months, at a period interest rate of 6/12 ? Add 3000 dollars. I get slightly less than 20,000