› CFA › CFA Level 1 › Question of the Week – Quantitative Methods

Question of the Week – Quantitative Methods

Add A Reply
Login
  • Author
    Posts
    • Avatar of AdaptPrepAdaptPrep
      Participant
        • Undecided
        27 Jan 2018 at 7:48 pm
        Up
        6
        ::

        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
      • Avatar of mlynch99mlynch99
        Participant
          • CFA Level 1
          03 Feb 2018 at 12:26 pm
          Up
          4
          ::

          Does anyone know when we get the answer?

        • Avatar of AdaptPrepAdaptPrep
          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.

        • Author
          Posts
        Viewing 2 reply threads
        • You must be logged in to reply to this topic.