Hi, in my class, Personal Financial Planning, my assignment is about planning a car purchase with a given budget.

John is buying a car, he can afford:
Monthly Pmt: $420
Number: 48 months
Interest Rate: 6.55%

He has $4,400 for a down payment.
He also has up to $2000 for sales tax (7%), if tax is less than 2000, he will hang on to the extra money.

Question: How much can John borrow under these loan terms?

>>To calculate the car price he can afford, you use the Present Value function on excel...
PV(0.0655/12,48,420) = $17,693.13

***So my question is would $17,693.13 be the amount he is borrowing, or would you add the tax??


2nd Question: If John sold his car at the end of month 24 for $9,500, what was his total cost of ownership using the formula we discussed in class?
>>The formula = Inflows - Outflows.
>>Outflows include Down Payment, Total Monthly Payments, Tax Title & Registration($38) , and Sales Tax.

***So...my question about this problem is would the Sales Tax part mean Sales tax on the Balance for month 24, or would it be the begining Balance amount?
Hope someone can help! Let me know if anything is unclear. Thank you!!!