Question

9. Steve buys a new car for $18,399. If he puts $3,000 down, what will be his car payment if his credit union offers him a 1.9% simple interest add-on car loan for 5 years? $287.03 10. If Steve hears about a new program that offers 1.5% on a 5 year amortized simple interest loan, should he stay with the credit union loan or try the new program? New program payment $266.55 11. Assuming Steve goes with the new program, create the first 3 rows of the amortization schedule. Pymt # Principal portion Interest portion Total payment Balance 0 $15,399 $247.30 $19.25 $266.55 $15.151.70 You finish 12. What will be the prepay amount if Steve decides to pay off the car after exactly 3 years? Assume there is no prepayment penalty. $6,298.62

9,10,11,12

Answer 1

Pymt Principal Interest Total Payment Balance (d-c) (e* 1.5%/12) 0 11 $ 2 $ 3 $ 41 S 5 $ 6 $ 7 $ 8 $ 9 $ 10 $ 11 $ 12 $ 13 $ 14 $ 150 $ 16 $ 171 $ 18 $ 19 $ 20 $ 21 $ 22 $ 23 $ 24 $ 25 $ 26 $ 27 $ 28 $ 29 $ 30 $ 31 $ 32 $ 33 $ 34 $ 35 $ 36 $ 247.30 $ 247.61 | $ 247.92 $ 248.23 $ 248.54 $ 248.85 $ 249.16 $ 249.47 $ 249.79$ 250.10 $ 250.41 $ 250.72 $ 251.04 $ 251.35 $ 251.66 $ 251.98 $ 252.29 $ 252.61 $ 252.93 $ 253.24 $ 253.56 $ 253.87 $ 254.19 $ 254.51 $ 254.83 $ 255.15 $ 255.47 $ 255.78 $ 256.10 $ 256.42 $ 256.75 $ 257.07 $ 257.39 $ 257.71 $ 258.03 $ 258.35 $ 19.25 $ 18.94 $ 18.63 $ 18.32 $ 18.01 $ 17.70 $ 17.39 $ 17.08 $ 16.76 $ 16.45 $ 16.14 $ 15.83 $ 15.51 $ 15.20 $ 14.89 $ 14.57 $ 14.26 $ 13.94 $ 13.62 $ 13.31 $ 12.99 $ 12.68 $ 12.36 $ 12.04 $ 11.72 $ 11.40 $ 11.08 $ 10.77 $ 10.45 $ 10.13 $ 9.80 $ 9.48 $ 9.16 $ 8.84 $ 8.52$ 8.20 $ $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55$ 266.55 $ 266.55 $ 266,55 $ 266.55 $ 266.55$ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ 266.55 $ (e-b) 15,399.00 15,151.70 14,904.09 14,656.17 14,407.94 14,159.40 13,910.55 13,661.39 13,411.91 13,162.13 12,912.03 12,661.62 12,410.90 12,159.86 11,908.51 11,656.85 11,404.87 11,152.57 10,899.97 10,647.04 10,393.80 10, 140.24 9,886.37 9,632.17 9,377.67 9,122.84 8,867.69 8.612.23 8,356.44 8,100.34 7,843.91 7,587.17 7,330.10 7,072.71 6,815.00 6,556.97 6,298.62 1 C

9. Car Pries Down Payment Loan Amount Simple Interest Rate Tenure $ 18,399.00 $ 3,000.00 $ 15,399.00 1.90% 5 Years/60 Months $ 1,462.91 Total Interest [Loan Amount ((Month/12) rate of Interest) Total Loan Payable = Loan Amount + Total Interest $ 15399 + $ 146 $ 16,861.91 Monthly Payment = Total Loan Payable/ Months $16861.91 / 60 $ 281.03 10. Under New scheme Car Pries Down Payment Loan Amount Amortized Simple Interest Tenure $ 18,399.00 $ 3,000.00 $ 15,399.00 1.50% 5 Years/60 Months Monthly Payment = pr(1+r)" A =P (1+r)" - 1 P = Loan Amount r = Interest rate per period n= total number of payments or periods 60 0.125% (1 + 0.125 % ) Monthly Payment = $ 15,399.00 (1 + 0.125%)*60-1 = $ 266.55 Total Loan Payable = Monthly payment. Total Months $ 266.55 * 60 = $ 15993 Total Loan Payable Under credit union loan $ 16,861.91 Total Loan Payable Under New program $ 15,993.00 Difference 868.90 New program is best option 11. Pyin Interest Total Payment Balance Principal b (d-c) (e. 1.5%/12) ol 1 $ 2 $ 247.30 $ 247.61 $ 247.92 $ 248.23 $ 248.54 $ 19.25 $ 18.94 $ 18.63 $ 18.32$ 18.01 $ 266.55 266.55 266.55 266.55 266.55 $ $ $ $ $ $ (e-b) 15,399.00 15.151.70 14,904.09 14,656.17 14,407.94 14,159.40 5 $