Tammy wants to buy a car that costs $10,000 and wishes to know the amount of the monthly payments,which will be made at the end of the month,with interest of 12% on the unpaid balance.She should use a table for the:

Question

Quizplus · Accepted Answer

Tammy is looking for the amount of monthly payments, which is a series of payments (annuity) made at the end of the month. Therefore, she should use the present value of an annuity of $1, which calculates the present value of a series of equal payments made at regular intervals. The future value of $1 and present value of $1 tables are not suitable for this calculation as they measure the value of a single payment or a lump sum at a future or present point in time. The future value of an annuity of $1 can be used to calculate the future value of a series of regular payments at a specific point in time, which is not what Tammy is looking for.

Tammy Wants to Buy a Car That Costs $10,000 and Wishes