Question:
Don James purchased a new automobile for $20,000. Don made a cash down payment of $5,000 and
agreed to pay the remaining balance in 30 monthly installments, beginning one month from the date of
purchase. Financing is available at a 24% annual interest rate.
Required:
Calculate the amount of the required monthly payment.
Answer:
Annuity = $20,000 – 5,000 = $670 = Payment
22.39646
Present value of an ordinary annuity of $1: n = 30, i = 2% (from Table 4)
Don James purchased a new automobile for $20,000. Don made a cash down payment of $5,000 and
agreed to pay the remaining balance in 30 monthly installments, beginning one month from the date of
purchase. Financing is available at a 24% annual interest rate.
Required:
Calculate the amount of the required monthly payment.
Answer:
Annuity = $20,000 – 5,000 = $670 = Payment
22.39646
Present value of an ordinary annuity of $1: n = 30, i = 2% (from Table 4)
