Certified Financial Planner (CFP) Exam 2026 – 400 Free Practice Questions to Pass the Exam

Using the end mode for financing an automobile loan where payments are due at the end of each month is appropriate because it reflects the timing of the cash flows accurately. When payments are made at the end of the period, such as at the end of each month, the end mode assumes that each payment is made after the accrual of interest for that month.

This mode is essential for calculating the present value or future value of the loan accurately because it aligns with the actual schedule of payments. By using this mode, the calculations account for the fact that the borrower is not utilizing the funds or facing the interest charge until the payment is made, which affects both the loan's balance and the total interest paid over the life of the loan.

Other modes, like the begin mode, would incorrectly suggest that payments are made in advance, leading to different calculations that could misrepresent the financial obligation. Continuous mode typically applies to scenarios involving continuously compounding interest rather than discrete monthly payments, while fixed mode does not pertain to payment timing but rather to the nature and structure of the payments themselves. Hence, the end mode is definitively the correct choice for this scenario.