Question

Word Problem 14-8 (Algo) [LU 14-1 (1, 2))

Before purchasing a used car, Cody Lind checked www.kbb.com to learn what he should offer for the used car he wanted to buy. Then
he conducted a carfax.com search on the car he found to see if the car had ever been in an accident. The Carfax was clean so he
purchased the used car for $14,900. He put $2,300 down and financed the rest with a 48-month, 7.5% loan. What is his monthly car
payment by table lookup? (Use Table 14.2)
Note: Do not round intermediate calculations. Round your answer to the nearest cent.
Monthly payment

Answer 1

Cody Lind's monthly car payment by table lookup is $304.67.

The monthly payment can be determined using the table lookup or using an online finance calculator.

The purchase cost of the used car = $14,900

Down payment = $2,300

Mortgage loan = $12,600 ($14,900 - $2,300)

From the Table 14.2, the monthly payment per $1,000 = $24.18

The monthly payment = $304.67 ($24.18 x $12,600/$1,000)

Using an online finance calculator confirms the above monthly payment as well.

N (# of periods) = 48 months

I/Y (Interest per year) = 7.5%

PV (Present Value) = $12,600

FV (Future Value) = $0

Results:

PMT (Monthly Payment) = $304.67

The sum of all periodic payments = $14,624.16

Total Interest = $2,024.16