Question

Melanie can afford a $310-per-month car payment. If she is being offered a 5-year car loan with an APR of 3.0%, compounded monthly, what is the value of the most expensive car she can afford

Answer 1

Here is the answer
$17,252.23

Answer 2

The most expensive car Melanie can afford is $17287.43

Explanation:

The EMI formula is :

`(p*r*(1+r)^(n) )/((1+r)^(n)-1 )`

Here we have to find the p

EMI = 310

r =
`(3)/(100)`=0.03
`(0.03)/(12)= 0.0025`

n =
`5*12=60`

Putting values in the formula we get,

`310=(p*0.0025*(1.0025)^(60) )/((1+r)^(60)-1 )`

`310=(p*0.0025*1.162)/(0.062)`

`50.22=0.002905p`

`p=17287.43` dollars

The most expensive car Melanie can afford is $17287.43