Copyright

E-loan, an online lending service, recently offered 36-month auto loans at 5.4% compounded...

Question:

E-loan, an online lending service, recently offered 36-month auto loans at 5.4% compounded monthly to applicants with good credit ratings. If you have a good credit rating and can afford monthly payments of $565:

1. How much can you borrow from E-loan?

2. What is the total interest you will pay for this loan?

Credit Ratings:

Just like governments and corporations, individuals have credit ratings that are used by financial institutions to make decisions about loans and interest rates. These credit ratings are based primarily on the individual's credit history.

Answer and Explanation: 1

Become a Study.com member to unlock this answer!

View this answer

1.

Let,

  • PMT = periodic payment = $565
  • n = number of periods = 36
  • r = interest rate = 5.4% / 12 = 0.45%

The present value (PV) of the annuity of...

See full answer below.


Learn more about this topic:

Loading...
How to Calculate the Present Value of an Annuity

from

Chapter 8 / Lesson 3
4.9K

Learn how to find present value of annuity using the formula and see its derivation. Study its examples and see a difference between Ordinary Annuity and Annuity Due.


Related to this Question

Explore our homework questions and answers library