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Question - 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 $1,060. The car dealer used an 8% rate compounded annually to determine the amount of the payments.
Use the appropriate present or future value table: FV of $1, PV of $1, FV of Annuity of $1 and PV of Annuity of $1
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)?
3. How much less interest would she have paid if she had been making quarterly payments instead of annual payments?
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