Harish D. answered • 02/23/21

Fintech professional with 2+ years of CFA teaching experience

The maximum price one can pay is the sum of what one can pay now (the down payment of $2000) and the present value of future payments one can make (P = $400 monthly for 5 years).

Here you find the number of monthly payments (N=5 yrs *12) and the effective monthly interest rate (r=6% per year / 12).

You can then compute the present value of the monthly payments as P*(1-1/(1+r)^N)/r.

Then you add this present value to the down payment and you are ready with the maximum price!