Capstone: cost the van on finance
Convert the terms, then price the loan.
Task:
You are deciding whether to finance a 28,000 van over five years at 6% a year. Convert the terms first: monthly rate in B6 and number of months in B7. Then give the monthly payment in B8. Then prove it in B9: feed the payment back into PV and you should get the price you started with.
Learning Objectives:
- Match the rate to the period
- Read the sign of a cash flow
- Check a payment by inverting it with PV
Solve without hints for +5 XP
The data in this exercise
This is the grid you start with. Cell references in the task — B6, C2 — point at the row numbers and column letters below.
| A | B | |
|---|---|---|
| 1 | Parameter | Value |
| 2 | Annual rate | 0.06 |
| 3 | Years | 5 |
| 4 | Price | 28000 |
| 5 | ||
| 6 | Monthly rate | |
| 7 | Months | |
| 8 | Monthly payment | |
| 9 | Check: price back out |
What this exercise teaches (contains the answer)
Mismatching the rate and the period count is the mistake that makes finance formulas produce confident nonsense: a yearly rate with a month count quietly prices the loan as though it ran for sixty years. Building the two conversions as their own cells makes the mistake visible instead of burying it inside one long formula.