John can afford to spend $500 per month on a car. He figures he needs half of it for gas, parking, and insurance. He has been to the bank, and they will loan him 100% of the car's purchase price.
a) If his loan is at a nominal 12% annual rate over 36 months, what is the most expensive car he can purchase?
b) The car he likes costs $14,000 and the dealer will finance it over 60 months at 12%. Can he afford it? If not, for how many months will he need to save his $500 per month?
c) What is the highest interest rate he can pay over 60 months and stay within his budget if he buys the $14,000 car now?