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Problem - Value of Payments - Upon graduation from college, Susana Lopez signed an agreement to buy a used car. Her annual payments, which are due at the end of each year for two years, are $1,480. The car dealer used a 12% rate compounded annually to determine the amount of the payments.
Required -
1. What should Susana consider the value of the car to be?
2. If she had wanted to make quarterly payments, what would her payments have been based on the value of the car as determined in part (1)? How much less interest would she have paid if she had been making quarterly payments instead of annual payments? What would have happened to the payment amount and the interest if she had asked for monthly payments?
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