Question

Kimberly Jensen of Storm Lake, Iowa, wants to buy some living room furniture for her new apartment. A local store offered credit at an APR of 16 perce with a maximum term of four years. The furniture she wishes to purchase costs $3,900, with no down payment required. Using Table 7-2 or the Garman/Forgue companion website, make the following calculations (round all intermediate calculations to two decimal places): a. What is the amount of the monthly payment if she borrowed for four years? Round your answer to the nearest cent. Use rounded answer for later calculations. $ b. What are the total finance charges over that four-year period? Round your answer to the nearest dollar. c. How would the payment change if Kimberly reduced the loan term to three years? Round your answer to the nearest cent. A(n) -Select 7 of $ compared to the 4-year loan. d. What are the total finance charges over that three-year period? Round your answer to the nearest dollar. e. How would the payment change if she could afford a down payment of $300 with four years of financing? Round your answer to the nearest cent. A(n) -Select- of $ compared to the $3,900, 4-year loan. f. What are the total finance charges over that four-year period given the $300 down payment? Round your answer to the nearest dollar.

Answer 1

1.
=PMT(16%/12,12*4,-3900)
=110.53

2.
=PMT(16%/12,12*4,-3900)*12*4-3900
=1405.300567

3.
=PMT(16%/12,12*3,-3900)
=137.11

An Increase of $26.59 compared to the 4-year loan

4.
=PMT(16%/12,12*3,-3900)*12*3-3900
1036.047438

5.
=PMT(16%/12,12*4,-3900+300)
=102.03

A Decrease of $8.50 compared to the $3,900, 4-year loan

6.
=PMT(16%/12,12*4,-3900+300)*12*4-3900+300
=1297.200523