Your Car Loan Requires Payments of $200 Per Month for the First

question 54

Multiple Choice

Your car loan requires payments of $200 per month for the first year and payments of $400 per month during the second year.The annual interest rate is 12 percent and payments begin in one month.What is the present value of this two-year loan?

• A)$6,246.34
• B)$6,389.78
• C)$6,428.57
• D)$6,753.05 PV = $200

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Definitions:

Security Interest

A legal right granted by a debtor to a creditor over the debtor's property to secure the repayment of a debt.

Consumer Goods

Products that are purchased for personal or household use, rather than for manufacturing or reselling.

Priority Rule

A principle that establishes the order in which claims or legal rights are to be enforced or satisfied.

Secured Party

An individual or entity that has an interest, usually a collateral interest, in the personal property of a debtor.