2. You have decided to purchase a new car and trade-in your old car. The car dealer has offered you a trade-in value of $5,000 on your old car. The car dealer will finance the remaining cost of the new car; however, you have decided that the maximum monthly car payment that you can afford is $450.00. Your loan rate will be 6 percent APR and you will be financing for 6 years (72 monthly payments). What is the maximum amount that you can pay for the car?

Financed for 72 months

N = 72

I/YR = 6%

PMT = $450

PVA = ?

Hint: You may want to use the following to determine your maximum loan amount:

PVA=payment[(1-(1+r)^-n)/r]