Question

An engineering student bought a car at a local used car lot. Including tax and insurance, the total price was $15,000. He is to pay for the car in 13 equal monthly payments, beginning with the first pay- ment immediately (the first payment is the down payment). Nominal interest on the loan is 12%, com- 4-38 monthly. After six payments he decides to sell the car. A buyer agrees to pay off the loan in full and to pay the engineering student $2000. If there are no penalty charges for this early payment of the loam how much will the car cost the new buyer? 4-34 Jerry bought a house for $400,000 and made an $80,000 down payment. He obtained a 30-year loan for the remaining amount. Payments were made monthly. The nominal annual interest rate was 6%. After 10 years (120 payments) he sold the house and paid off the loan's remaining balance. (a) What was his monthly loan payment? (b) What must he have paid (in addition to his regular 120th monthly payment) to pay off the loan? 4-59 Perry is a freshman. He estimates that the cost of tuition, books, room and board, transportation, and other incidentals will be $21,000 this year. He expects these costs to rise about $1500 each year while he is in college. If it will take him 5 years to earn his BS, what is the present cost of his degree at an interest rate of 4%? If he earns an extra $15,000 annually for 40 years, what is the present worth of his degree? Contributed by Paul R. McCright, University of South Florida 4-90 In the 1500s King Henry VII borrowed money from his bankers on the condition that he pay 5% of the loan at each fair (there were four fairs per year) until he had made 40 payments. At that time the loan would be considered repaid. What effective annual interest did King Henry pay?

Answer 1