Sam can afford to pay $450 a month for a new car.The bank will give her a 60 month,6% annual rate loan with no down payment.Approximately how much can she afford to borrow?
A)$23,276
B)$7,272
C)$17,015
D)$32,090

Question

Quizplus · Accepted Answer

The amount Sam can afford to borrow can be calculated using the formula for the present value of an annuity: $P = \frac{PMT}{r} \left(1 - \left(1 + r\right)^{-n}\right)$, where PMT is the monthly payment, r is the monthly interest rate, and n is the total number of payments. With PMT = $450, r = 0.06/12 = 0.005, and n = 60, the calculation gives approximately $23,276.

Sam Can Afford to Pay $450 a Month for a New