You are purchasing an automobile priced at $20,000 by borrowing at 12% interest compounded monthly. The loan will be repaid in monthly installments for ﬁve years. What is the constant dollar value (value at the time of ﬁnancing) of the 36th payment of this loan, if the general inﬂation rate is 5% compounded monthly?

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Mr. Dubey • 51.17K Points
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Q.) You are purchasing an automobile priced at $20,000 by borrowing at 12% interest compounded monthly. The loan will be repaid in monthly installments for ﬁve years. What is the constant dollar value (value at the time of ﬁnancing) of the 36th payment of this loan, if the general inﬂation rate is 5% compounded monthly?

(A) 361.91

(B) 383.66

(D) 396.02

Correct answer : Option (B) - 383.66

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