A used car dealer advertises financing at 4% interest over 3 years with monthly payments. You...
A used car dealer advertises financing at 4% interest over 3
years with monthly payments. You must pay a processing fee of $900
at signing. The car you like costs $12,000.
(a) What is your effective annual interest rate?
(b) After one year, you would like to pay off the loan. What is the
effective interest rate and APR?
Including the Function or Equation you use to do the calculations
in your spreadsheet.
Homework Answers
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A used car dealer advertises financing at 4% interest over 3
years with monthly payments. You...
7-38 A used car dealer advertises financing at 4% interest over 3 years with monthly payments....
7-38 A used car dealer advertises financing at 4% interest over 3 years with monthly payments. You must pay a processing fee of $250 at signing. The car you like costs $6000. (a) What is your effective annual interest rate? (b) You believe that the dealer would accept $S200 if you paid cash. What effective annual interest rate would be paying if you financed with the dealer?
8. You purchased a new car for sis,000. The dealer offers you an interest rate of 5% over years. ...
8. You purchased a new car for sis,000. The dealer offers you an interest rate of 5% over years. a) What would your monthly payment be? b) Suppose you would like to save interest by paying the loan off in 3 years. How much more a ma would you need to pay? c) What would the effective interest rate be if you paid off the car in 3 years? 9. Sketch the annual cash flow diagrams for each case in...
glancing A home mortgage with monthly payments for 30 years is available at 6% interest. The...
glancing A home mortgage with monthly payments for 30 years is available at 6% interest. The home you are buying costs $120,000, and you have saved $12.000 to meet the requirement for a 10% down payment. The lender charges "points" of 2% of the loan value as a loan origination and processing fee. This fee is added to the initial balance of the loan (a) What is your monthly payment? (b) If you keep the mortgage until it is paid...
You are considering buying a car worth $30,000. The dealer, who is anxious to sell the...
You are considering buying a car worth $30,000. The dealer, who is anxious to sell the car, offers you an attractive financing package. You have to make a down-payment of $3,500, and pay the rest over 3 years with monthly payments. The dealer will charge you interest at a constant APR of 2%, which is lower than the market interest rate. (1) What is the monthly payment to the dealer? (2) The dealer offers you a second option: you pay...
We are considering purchasing a car. We can obtain financing (a loan) from the dealer or...
We are considering purchasing a car. We can obtain financing (a loan) from the dealer or the bank. The term of either loan will be 5 years (with monthly payments). The dealer offers a loan with an annual nominal interest rate of 1.9% for the full cost of $24, 000 (including taxes, etc) or we may purchase the car at the discounted price of $21, 500 and finance through the bank at an interest rate of 4.5%. Which option should...
Assume you take out a car loan of $7,900 that calls for 60 monthly payments of...
Assume you take out a car loan of $7,900 that calls for 60 monthly payments of $230 each. a. What is the APR of the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Use a financial calculator or Excel.) *what is Effective interest rate?? b. What is the effective annual interest rate on the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)...
You take out an $8,600 car loan that calls for 48 monthly payments starting after 1...
You take out an $8,600 car loan that calls for 48 monthly
payments starting after 1 month at an APR of 6%. a. What is your
monthly payment? (Do not round intermediate calculations. Round
your answer to 2 decimal places.) b. What is the effective annual
interest rate on the loan? (Do not round intermediate calculations.
Enter your answer as a percent rounded to 2 decimal places.) c. Now
assume the payments are made in four annual year-end installments.
What...
You take out a $7,400 car loan that calls for 36 monthly payments starting after 1...
You take out a $7,400 car loan that calls for 36 monthly payments starting after 1 month at an APR of 9%. a. What is your monthly payment? (Do not round intermediate calculations. Round your answer to 2 decimal places.) - monthly payment? b. What is the effective annual interest rate on the loan? (Do not round intermediate calculations. Enter your answer as a percent -effective annual interest rate?? c. Now assume the payments are made in four annual year-end...
Monthly loan payments Personal Finance Problem Tim Smith is shopping for a used luxury car. He...
Monthly loan payments Personal Finance Problem Tim Smith is shopping for a used luxury car. He has found one priced at $27,000. The dealer has told Tim that if he can come up with a down payment of $5,400, the dealer will finance the balance of the price at a 7% annual rate over 5 years (60 months). (Hint: Use four decimal places for the monthly interest rate in all your calculations.) a. Assuming that Tim accepts the dealer's offer,...
Monthly loan payments Personal Finance Problem Tim Smith is shopping for a used luxury car. He...
Monthly loan payments Personal Finance Problem Tim Smith is shopping for a used luxury car. He has found one priced at $39,000. The dealer has told Tim that if he can come up with a down payment of $5,900, the dealer will finance the balance of the price at a 5% annual rate over 5 years (60 months). (Hint: Use four decimal places for the monthly interest rate in all your calculations.) a. Assuming that Tim accepts the dealer's offer,...
7-38 A used car dealer advertises financing at 4% interest over 3 years with monthly payments. You must pay a processing fee of $250 at signing. The car you like costs $6000. (a) What is your effective annual interest rate? (b) You believe that the dealer would accept $S200 if you paid cash. What effective annual interest rate would be paying if you financed with the dealer?
8. You purchased a new car for sis,000. The dealer offers you an interest rate of 5% over years. a) What would your monthly payment be? b) Suppose you would like to save interest by paying the loan off in 3 years. How much more a ma would you need to pay? c) What would the effective interest rate be if you paid off the car in 3 years? 9. Sketch the annual cash flow diagrams for each case in...
glancing A home mortgage with monthly payments for 30 years is available at 6% interest. The home you are buying costs $120,000, and you have saved $12.000 to meet the requirement for a 10% down payment. The lender charges "points" of 2% of the loan value as a loan origination and processing fee. This fee is added to the initial balance of the loan (a) What is your monthly payment? (b) If you keep the mortgage until it is paid...
You are considering buying a car worth $30,000. The dealer, who is anxious to sell the car, offers you an attractive financing package. You have to make a down-payment of $3,500, and pay the rest over 3 years with monthly payments. The dealer will charge you interest at a constant APR of 2%, which is lower than the market interest rate. (1) What is the monthly payment to the dealer? (2) The dealer offers you a second option: you pay...
You take out an $8,600 car loan that calls for 48 monthly
payments starting after 1 month at an APR of 6%. a. What is your
monthly payment? (Do not round intermediate calculations. Round
your answer to 2 decimal places.) b. What is the effective annual
interest rate on the loan? (Do not round intermediate calculations.
Enter your answer as a percent rounded to 2 decimal places.) c. Now
assume the payments are made in four annual year-end installments.
What...
Monthly loan payments Personal Finance Problem Tim Smith is shopping for a used luxury car. He has found one priced at $27,000. The dealer has told Tim that if he can come up with a down payment of $5,400, the dealer will finance the balance of the price at a 7% annual rate over 5 years (60 months). (Hint: Use four decimal places for the monthly interest rate in all your calculations.) a. Assuming that Tim accepts the dealer's offer,...
Monthly loan payments Personal Finance Problem Tim Smith is shopping for a used luxury car. He has found one priced at $39,000. The dealer has told Tim that if he can come up with a down payment of $5,900, the dealer will finance the balance of the price at a 5% annual rate over 5 years (60 months). (Hint: Use four decimal places for the monthly interest rate in all your calculations.) a. Assuming that Tim accepts the dealer's offer,...
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