Answer:
$24,952.65
Step-by-step explanation:
Phil can afford $200 a month for 5 years for a car loan. if the interest rate is 7.5 percent.
Loan formula:
[tex]E=\dfrac{P\cdot \frac{r}{n}}{1-(1+\frac{r}{n})^{-n\time t}}[/tex]
where,
P is loan amount, P=?
E is monthly payment, E=$500
n is payment mode, n=12
t is time, t=5 years
r is rate of interest, r = 0.075
Substitute the value into formula and solve for P
[tex]500=\dfrac{P\cdot \frac{0.075}{12}}{1-(1+\frac{0.075}{12})^{-12\time 5}}[/tex]
[tex]P=\frac{500\cdot\left(1-\left(1+\frac{0.075}{12}\right)^{-60}\right)}{\frac{0.075}{12}}[/tex]
[tex]P=24952.65[/tex]
Hence, Phil can borrow to purchase a car be $24,952.65
