PMT problem comments

The PMT problem that you just finished for Week 1 Homework asked you to analyze two options. If this were a real problem (not one in a course at Dominican), there are other options you should consider.

Option 3 would be don't purchase a car. This would give you $386 or $642 per month that you could invest. Option 4 would be to purchase a less expensive car -- probably a used car. This could allow you to have a lower payment AND a shorter payment term.

If your want to generate investable funds either for retirement or to start a business, then the major decision is how much (if anything) to spend for a car. All of the different financing options are a secondary issue. There is nothing wrong with having tools like Excel and the PMT function to evaluate financing alternatives. Sometimes car dealers offer "very bad" financing options and you can avoid paying way too much by doing the calculations like the ones that you did in the homework assignment.