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Chase plans to buy a new car and determines he can budget $725 monthly for four years. His bank is offering an 8 25% annual interest rate What is the maximum loan he can afford to stay in his budget? Use the formula, A = (p[(1 + r/n) ^ m - 1])/(1/n * (1 + r/n) ^ N) , where Pis the monthly payment, the annual interest rate, nis the number of times interest is compounded in one year and is the number of years.

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Answer:

$29555.20

Step-by-step explanation:

Given that:

P = $725

r = 8.25% = 0.0825

n = 12

t = 4 years

From the given formula:

[tex]A = \dfrac{P{(1+\dfrac{r}{n})^{n*t}-1 } }{\dfrac{r}{n}(1+ \dfrac{r}{n})^{nt}}}[/tex]

[tex]A = \dfrac{725{(1+\dfrac{0.0825}{12})^{12*4}-1 } }{\dfrac{0.0825}{12}(1+ \dfrac{0.0825}{12})^{4\times 12}}}[/tex]

[tex]A = \dfrac{725{(1.3894-1 )} } { 0.006875 \times 1.3894 }[/tex]

A = $29555.20

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