CFA CFA Level 1 Question of the Week – Quantitative Methods

Question of the Week – Quantitative Methods

  • This topic has 2 replies, 2 voices, and was last updated Feb-18 by AdaptPrep.
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  • AdaptPrep
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    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
    mlynch99
    Participant
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    3
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    Does anyone know when we get the answer?

    AdaptPrep
    Participant
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    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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