The discussion centers on calculating the present value (PV) that Carmen needs to invest to cover monthly payments for a jeep costing $38,400, financed at 0% for 48 months. Using the formula PV = R x (1 - (1 + i)^-n) / i, where R is the monthly payment, i is the monthly interest rate (0.06/12), and n is the total number of payments (48), the calculated present value is $1,635,084. The discussion also highlights the need to determine the monthly payment amount and the investment period after the first payment.
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Let present value be PVAt the end of the season, the jeep Carmen is buying is offered with 0% financing for 48 months. The negoctiated cost is $38 400, plus GST and PST. The total cost is divided into equal payments for 48 months, with the first payment on the date of purchase. Carmen will make the first payment, then invest an amount to provide the money each month for the remaining payments, which start in a month. How much must Carmen invest, at 6% per annun, compounded monthly, to have the amount each month for the payment?