Answer:
Cost of car=$27,784
Explanation:
Loan Amortization: A loan repayment method structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan principal amount and the accrued interest.
The monthly equal installment is calculated as follows:
Monthly equal installment= Loan amount/Monthly annuity factor
Loan amount =Balance payment= ?
Monthly annuity factor =
=( 1-(1+r)^(-n))/r
r- Monthly interest rate (r)
= 12/12= 1%
n- Number of months ( n) = 12× 4 = 48
Annuity factor
= ( 1- (1.01)^(-48)/0.01= 37.97
Total payments= 600 × 37.973
= $22,784.37
Cost of car = Down payment and the present value of balance
= 5,000+ 22,784.3=$27,784
