NOTE: In problem below:
• Show your cash flow diagrams
• Find the solution using the mathematical equivalence formulae (such as F=P(1+i)n ), substitute and solve (with your calculator – not with the tables) for the final answer
• Solve by using the proper equivalence expressions (such as F = P(F/P, i, n)) and the tables of equivalence factors.
• Draw a box around your final answers.
• APR = Annual Percentage Rate
You want to by a boat and can afford payments of $350 per month for six years. The monthly interest rate is 0.5%. (a) What is the maximum you can spend on the boat if there is no down payment? (b) What is the maximum you can spend on the boat if you make a down payment of $6000 at the time of purchase?