If you were to finance a $25,000 car purchase with a 6 year, 5% compounded monthly loan, your monthly payments will be closest to: $400 $410 $420

Does anyone know when we get the answer?

You can solve this with the TVM function on your calculator. The trick is converting everything to monthly payments: PV: -25,000 I: 5%/12 = 4.167% FV: 0 N: 6 * 12 = 72 Solving for PMT gives you $402.62.

Question Of The Week - Quantitative Methods (7) - CFA Level 1

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This topic has 2 replies, 2 voices, and was last updated Feb-187:04 am by AdaptPrep.

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- mlynch99
  Participant
  - CFA Level 1
  03 Feb 2018 at 12:26 pm
  Up
  4
  ::
  Does anyone know when we get the answer?
- AdaptPrep
  Participant
  - Undecided
  04 Feb 2018 at 7:04 am
  Up
  3
  ::
  You
  can solve this with the TVM function on your calculator. The trick is
  converting everything to monthly payments:
  
  PV: -25,000
  
  I:
  5%/12 = 4.167%
  
  FV:
  0
  
  N: 6
  * 12 = 72
  
  Solving
  for PMT gives you $402.62.
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