Rachel purchased a $23,000 car three years ago using a 9 percent, 5-year loan. S
ID: 2654071 • Letter: R
Question
Rachel purchased a $23,000 car three years ago using a 9 percent, 5-year loan. She has decided that she would sell the car now, if she could get a price that would pay off the balance of her loan.
What is the minimum price Rachel would need to receive for her car?
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Rachel purchased a $23,000 car three years ago using a 9 percent, 5-year loan. She has decided that she would sell the car now, if she could get a price that would pay off the balance of her loan.
Explanation / Answer
Q1)
Rachel purchased a $23,000 car three years ago using a 9 percent, 5-year loan. She has decided that she would sell the car now, if she could get a price that would pay off the balance of her loan.
What is the minimum price Rachel would need to receive for her car?
Monthly Payment = pmt(rate,nper,pv,fv)
rate = 9%/12 = 0.75%
nper = 5*12 = 60
pv = 23000
fv =0
Monthly Payment = pmt(0.75%,60,23000,0)
Monthly Payment = $ 477.4422
Loan outstanding presently i.e after 3 year = pv(rate,nper,pmt,fv)
rate = 9%/12 = 0.75%
nper = (5-3)*12 = 24
pmt = 477.4422
fv =0
Loan outstanding presently i.e after 3 year= pv(0.75%,24,477.4422,0)
Loan outstanding presently i.e after 3 year = $ 10450.80
Answer
Minimum price Rachel would need to receive for her car = $ 10450.80
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