Assume you buy a car for $18,000 today and agree to pay $250 a month, beginning next month, for 5 years with a final payment also due 5 years from today to pay off any remaining balance. How large will that final payment be, if interest accrues at 2.9% per year, compounded monthly?
Click on the arrows to vote for the correct answer
A. B. C. D. E.B
There are 60 months in 5 years. This is a problem known as a balloon payment. On the BAII Plus, press 60 N, 2.9 divide 12 = I/Y, 18000 PV, 250 +/- PMT, CPT
FV. On the HP12C, press 60 n, 2.9 ENTER 12 divide i, 18000 PV, 250 CHS PMT, FV. Note that the answer will be displayed as a negative number. Make sure the
BAII Plus has the value of P/Y set to 1.