Finance app 287
The PV value is
calculated as
15,705.85, this
being the maximum
you can borrow.
Thus, with your
$3,000 deposit, you
can afford a car with
a price tag of up to $18,705.85.
Cash flow diagrams
TVM transactions can be represented in cash flow
diagrams. A cash flow diagram is a time line divided into
equal segments representing the compounding periods.
Arrows represent the cash flows. These could be positive
(upward arrows) or negative (downward arrows),
depending on the point of view of the lender or borrower.
The following cash flow diagram shows a loan from a
borrower’s point of view:
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