You are considering buying a car worth $30,000. The dealer, who is anxious to sell the...

Question

Question

Answer 1

Answer #1

Now Amount to be paid after three years= Principal amount[1+(r/100)]^n

= $26000[1+(2/100)]^2 = $27050.4

Monthly installment = total amount / total period in months

= $27050.4/24 = $1127.1

Hence, $1127.1 would be the monthly payment to the dealer towards the loan.

Answer 2

Similar Homework Help Questions

2. You are considering buying a new car from a local dealer (Dealer 1) for $30,000....

2. You are considering buying a new car from a local dealer (Dealer 1) for $30,000. Dealer 1 will finance the entire purchase price at 6% interest over 5 years. Interest is compounded monthly and you must make monthly payments. What is the most you would be willing to offer another dealer (Dealer 2) for the same car who is offering a financing plan with a 2% interest rate over 5 years? Hint: If the loan payments are the same...
You are looking at buying a car. You negotiate the price of the car down to...

You are looking at buying a car. You negotiate the price of the car down to $16,000. You have $6,000 in cash, so you’ll borrow $10,000 to purchase the car. The dealer offers you a loan that has an APR of 4%, compounded monthly, with monthly payments starting next month and lasting 5 years. What would be the monthly payment?
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...

You are considering buying a car with an amortized loan. The car loan will be $40,000...

You are considering buying a car with an amortized loan. The car loan will be $40,000 and have an annual interest rate of 2.8%, compounded monthly. You have two options for financing the car, the first is a fully amortized loan for 72 months while the second is a partially amortized loan for 36 months with a balloon payment of $18,000 (i.e. you will still owe $18,000 on the loan at month 36). What are the payments for each option?
Comparing Different Financing Options EXAMPLE 3.9 Buying a Car: Paying in Cash versus Taking a Loan...

Comparing Different Financing Options EXAMPLE 3.9 Buying a Car: Paying in Cash versus Taking a Loan Consider the following two options proposed by an auto dealer: • Option A: Purchase the vehicle at the normal price of $26,200 and pay for the vehicle over 36 months with equal monthly payments at 1.9% APR financing • Option B: Purchase the vehicle at a discounted price of $24,048 to be paid im- mediately. The funds that would be used to purchase the...
You are going to buy a new car worth $23,800. The dealer computes your monthly payment...

You are going to buy a new car worth $23,800. The dealer computes your monthly payment to be $510.45 for 60 months of financing. What is the dealer's effective rate of return on this loan transaction? The dealer's effective rate of return is %. (Round to one decimal place.)

You are going to buy a new car worth $23,800. The dealer computes your monthly payment...

You are going to buy a new car worth $23,800. The dealer computes your monthly payment to be $519.55 for 60 months of financing. What is the dealer's effective rate of return on this loan transaction? The dealer's effective rate of return is %. (Round to one decimal place.)
You are going to buy a new car worth $23,900. The dealer computes your monthly payment...

You are going to buy a new car worth $23,900. The dealer computes your monthly payment to be $522.55 for 60 months of financing. What is the dealer's effective rate of return on this loan transaction? The dealer's effective rate of return is%. (Round to one decimal place.)
You need a new car and the dealer has offered you a price of $20,000, with...

You need a new car and the dealer has offered you a price of $20,000, with the following payment options: (a) pay cash and receive a $2,000 rebate, or (b) pay a $5,000 down payment and finance the rest with a 0% APR loan over 30 months. But having just quit your job and started an MBA program, you are in debt and you expect to be in debt for at least the next 2 years. You plan to use...

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...