. You get an auto loan at 3.5% interest for 5 years; please answer the following.
A. You can afford a $250 per month car payment; how expensive a car can you afford?
B. You purchase a car for $8000 with a $2000 down payment, what are your monthly payments?

Using the monthly payment formula, it is found that:A. You can afford a car at a price of $13,742.36.B. The monthly payments are of $109.15.What is the monthly payment formula?The monthly payments are given by the equation presented as follows:[tex]A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}[/tex]The variables involved in the equation are listed and explained as follows:P is the initial amount.r is the interest rate.n is the number of payments.For item a, the parameters are given as follows:A = 250, r/12 = 0.035/12 = 0.002917, n = 5 x 12 = 60Hence the maximum value of the car is obtained as follows:[tex]A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}[/tex][tex]250 = P\frac{0.002917(1.002917)^{60}}{(1.002917)^{60} - 1}[/tex]0.0181919241P = 250P = 250/0.0181919241P = $13,742.36For item b, the parameters are given as follows:P = 6000, r/12 = 0.035/12 = 0.002917, n = 5 x 12 = 60(P = 6000 as the 2000 of the down payment are already paid, hence not subjected to interest).Hence the monthly payments are given as follows:[tex]A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}[/tex][tex]A = 6000\frac{0.002917(1.002917)^{60}}{(1.002917)^{60} - 1}[/tex]A = 6000 x 0.0181919241A = $109.15.More can be learned about the monthly payment formula at https://brainly.com/question/26011426#SPJ1