Question

You currently have a one-year-old loan outstanding on your car. You make monthly payments of $500. You have just made a payment. The loan has four years to go (i.e., it had an orig of five years). Show the timeline from your perspective. How would the timeline differ if you created it from the bank's perspective? Show the timeline from your perspective. (Select the best choice below.) O A. Month 0 1 2 3 4 48 Cash Flow $500 $500 $500 $500 $500 O B. Month 0 1 2 3 4 60 -$500 - $500 -$500 - $500 - $500 - $500 Cash Flow C. Month 0 1 2 3 4 60 Cash Flow $500 $500 $500 $500 $500 $500 O D. Month 0 1 3 4 48 Cash Flow -$500 -$500 -$500 - $500 - $500 Which of the following loan timelines is from the bank's perspective? (Select the best choice below.) O A. Month 0 2 3 4 48 Cash Flow $500 $500 $500 $500 $500 O B. Month 0 1 2 3 4 60 $500 $500 $500 $500 $500 $500 Cash Flow C. Month 0 1 2 4 60 - $500 $500 - $500 $500 $500 - $500 Cash Flow O D. Month C 1 2 3 4 48 lick to select your answer.

Answer 1

1. Since, you have just made a payment, next payment is due at t=1 and it will be -$500 till t=48. (Option D.)

D. Month 2 3 4 48 -$500 Cash Flow - $500 - $500 - $500 - $500

2. From Bank's perspective, It will be just opposite: (option A.)

A. Month 48 2 Cash Flow $500 $500 $500 $500 $500

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