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The purchase of a car requires a $25,000 loan to be repaid in 48 monthly installments over 4 years at 12% compounded monthly. If the
The purchase of a car requires a $25,000 loan to be repaid in 48 monthly installments over 4 years at 12% compounded monthly. If the general inflation rate is 6% compounded monthly, find the Actual-dollar value (A$n ) and the Real/constant-dollar value (R$n ) of the 20th payment. Hints: Given P=$25,000 and i = compound interest rate = x% per month, how do you calculate A$20? And given A$n and f = General inflation rate = y% per month, how do you calculate R$20?
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