Some lending institutions calculate the monthly payment M on a loan of L dollars at an interest rate r (expressed as a decimal) by using the formula: ![Some lending institutions calculate the monthly payment M on a loan of L dollars at an interest rate r (expressed as a decimal) by using the formula: where k = [1 + ( r / 12 ) ]<sup> 12</sup><sup>t</sup><sup> </sup> and t is the number of years that the loan is in effect. An automobile dealer offers customers no-down-payment 7-year loans at an interest rate of 7%. If a customer can afford to pay $108 per month, find the price of the most expensive car that can be purchased. A) $ 7,145.44 B) $ 7,155.79 C) $ 7,161.43 D) $ 7,165.81 E) $ 7,164.60](https://d2lvgg3v3hfg70.cloudfront.net/TB8634/11eb7cb3_b020_9f4d_acd2_db5a73732f70_TB8634_11.jpg)
where k = [1 + ( r / 12 ) ] 12t and t is the number of years that the loan is in effect. An automobile dealer offers customers no-down-payment 7-year loans at an interest rate of 7%. If a customer can afford to pay $108 per month, find the price of the most expensive car that can be purchased.
A) $ 7,145.44
B) $ 7,155.79
C) $ 7,161.43
D) $ 7,165.81
E) $ 7,164.60
Correct Answer:
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