Some Lending Institutions Calculate the Monthly Payment M on a Loan

question 39

Multiple Choice

Some lending institutions calculate the monthly payment M on a loan of L dollars at an interest rate r (expressed as a decimal) by using the formula: where k = [1 + ( r / 12 ) ] ^12t and t is the number of years that the loan is in effect. An automobile dealer offers customers no-down-payment 8-year loans at an interest rate of 10%. If a customer can afford to pay $122 per month, find the price of the most expensive car that can be purchased.

• A)$ 8,050.00
• B)$ 8,045.62
• C)$ 8,039.98
• D)$ 8,048.79
• E)$ 8,029.63

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Definitions:

Corruption

The abuse of entrusted power for private gain, which can occur in both the public and private sectors.

Economic Espionage

The illegal act of stealing or attempting to steal trade secrets or proprietary information from a company for economic gain.

Utilitarianism

An ethical theory that suggests an action is right if it benefits the greatest number of people.

Business Intelligence

The strategies and technologies used by enterprises for data analysis of business information to support decision making.