Chase plans to buy a new car and determines he can budget $725 monthly for four years. His bank is
offering an 8.25% annual interest rate. What is the maximum loan he can afford to stay in his budget?
Use the formula, A – P/(1+) -11
, where P is the month payment, r is the annual interest rate, n is
the nur
the number of times interest is compounded in one year, and t is the number of years.
O A. $26,000.50
B. $29,555.50
C. $37.425.75
O
D. $52,500.00

The correct answer is B. $ 29,555.50

Step-by-step explanation:

Let's calculate A, using the formula provided, this way:

A = P * [(1 + r)ⁿ - 1]/r * (1 + r)ⁿ, where:

P is the month payment = 725

r is the monthly interest rate = 0.0825/12 = 0.006875

n is  the the number of months to pay = 4 * 12 = 48

Replacing with the values we know, we have:

A = P * [(1 + r)ⁿ - 1]/r * (1 + r)ⁿ

A = 725 * [(1 +0.006875 )⁴⁸ - 1]/0.006875 * (1 +0.006875 )⁴⁸

A = 725 * 0.38939833/0.006875 * 1.38939833

A = 282.313789/0.009552114

A = 29,555.50

The correct answer is B. $ 29,555.50