Yes, that is the amount of the loan Clarissa can afford to borrow.

[scienceman2k9]

Problem:

Clarissa wants to buy a new car. Her loan officer tells her that her annual rate is 8%, compuded continously, over a four-year term. Clarissa informs her loan officer that she can make qual monthly payments of $225. How much can Clarissa afford to borrow?

I figured that she will pay $10800 (48 months * $225)

Skipping the differential derivation...

If A(t)=Ke^.08t ...whre t=4 and A(4)=10800...then k=$7842.41...is this the amount (principle) of the loan? I'm not accounting friendly :(

 

[jpklcapp]

that is correct