Phil can afford $200 a month for 5 years for a car loan. if the interest rate is 7.5 percent, how much can he afford to borrow to purchase a car?

Answer:$24,952.65Step-by-step explanation:Phil can afford $200 a month for 5 years for a car loan. if the interest rate is 7.5 percent.Loan formula: [tex]E=\dfrac{P\cdot \frac{r}{n}}{1-(1+\frac{r}{n})^{-n\time t}}[/tex]where, P is loan amount, P=?E is monthly payment, E=$500n is payment mode, n=12 t is time, t=5 years r is rate of interest, r = 0.075Substitute the value into formula and solve for P [tex]500=\dfrac{P\cdot \frac{0.075}{12}}{1-(1+\frac{0.075}{12})^{-12\time 5}}[/tex][tex]P=\frac{500\cdot\left(1-\left(1+\frac{0.075}{12}\right)^{-60}\right)}{\frac{0.075}{12}}[/tex][tex]P=24952.65[/tex]Hence, Phil can borrow to purchase a car be $24,952.65