Loan calculations• An engineer wants to purchase a used car for $15,000. The dealer offered to financethe deal at 6.45% APR for 4 years with a 6% downpayment. Engineer's bank willprovide a loan at 7.8% for 3 years, but want a 7% downpayment.a. Calculate the required downpayment and monthly payment for each loan option(Assume monthly compounding and monthly loan payments.)b. What additional factors should an engineer consider when deciding which is the bestdeal for her/his?

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Answered: An engineer wants to purchase a used…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

Kelly Robins is considering purchasing a usedautomobile. The price including the title and taxes is$15,455. Kelly is able to make a $2,455 down payment. The balance of $13,000 will be borrowed fromher credit union at an interest rate of 9.45% compounded daily. The loan should be paid in 36 equalmonthly payments. Compute the monthly payment.What is the total amount of interest Kelly has to payover the life of the loan?
Suppose that you decide to borrow $15,000 for a new car. You can select one of the following loans, each requiring regular monthly payments. Installment Loan A: three-year loan at 6.3% Installment Loan B: five-year loan at 5.2% Use PMT= nt] to complete parts (a) through (c) below. The total interest for Loan A is $1501.35. (Round to the nearest cent as needed.) b. Find the monthly payments and the total interest for Loan B. The monthly payment for Loan B is $284.42 (Do not round until the final answer. Then round to the nearest cent as needed.)
You are buying a house and will borrow $245,000 on a 25-year fixed rate mortgage with monthly payments to finance the purchase. Your loan officer has offered you a mortgage with an APR of 4.80 %. Alternatively, she tells you that you can "buy down" the interest rate to 4.45% If you pay points up front on the loan. A point on a loan is 1% (one percentage point) of the loan value. How many points, at most, would you be willing to pay to buy down the interest rate? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.164.) Maximimum points
You want to borrow $59,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $1,100 but no more. Assuming monthly compounding, what is the hughest rate you can afford on a 66-month APR loan? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places
You are purchasing a new car for $27,600. The dealership offers you three options: 0% financing: 0 down and 0% financing for 48 months. Rebate: 0 down. If you choose the rebate, you will need to secure a loan for the balance at your local bank. Down payment: Make a down payment of 5% or more and get financing at 1.5% compounded monthly for 48 months. The rebate offer is $1900, and you can obtain a car loan at your local bank for the balance at 2.03% compounded monthly for 48 months. If you choose the rebate, what is your monthly payment? $ _______ . Round to the nearest dollar.
You are offered an add-on loan for $4,500 at 18% for 5 years. What is the monthly payment? What is the amount of interest? What is the true interest rate cost of this loan? If you could pay the same loan above at a compound rate: What would the monthly payment be? What would the amount of interest be? Prepare a monthly payment schedule for each loan above using Excel, and submit it. Suppose that you are only allowed to make a balloon payment to the principal of the compound interest loan. You have $1,000 to put down at the beginning of year three. How many payments will you save?
You can afford a loan payment of $1200 a month. You have put an offer of $175,000 on a house. You are considering three different loans. Loan A. P = $175,000 at a rate of 5% with monthly payments for 30 years. Loan B. P = $175,000 at a rate of 4% with monthly payments for 15 years. Loan C. P = $175,000 at a rate of 4.5% with monthly payments for 20 years. Find the payment and total interest for each loan. Loan A: Payment = Total Interest = Loan B: Payment = Total Interest = Loan C: Payment = Total Interest =
You wish to buy a $20, 500 car. The dealer offers you a 5-year loan with a 9 percent APR. What are the monthly payments? How would the payment differ if you paid interest only?
Goran plans to buy a used truck that costs $15,000. The dealer requires a 20% down payment. The rest of the cost is financed with a 3-year, fixed-rate amortized auto loan at 5.5% annual interest with monthly payments. Complete the parts below. Do not round any intermediate computations. Round your final answers to the nearest cent if necessary. If necessary, refer to the list of financial formulas.
You want to buy a new sports coupe for $87,500, and the finance office at the dealership has quoted you an APR of 6.9 percent for a 48-month loan to buy the car. a. What will your monthly payments be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the effective annual rate on this loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Monthly payment b. Effective annual rate %
You are purchasing a new car for $27,600. The dealership offers you three options: 0% financing: 0 down and 0% financing for 48 months. Rebate: 0 down. If you choose the rebate, you will need to secure a loan for the balance at your local bank. Down payment: Make a down payment of 5% or more and get financing at 1.5% compounded monthly for 48 months: Suppose you make a down payment of 10% of $27,600 and finance the rest at 1.5% compounded monthly for 48 months. How much interest do you pay over the life of the loan? $ ________ . Round to the nearest dollar. You want to make monthly payments of $431, but you don't want a car loan over your head for more than 48 months, so you decide to go with the down payment option. How much of a down payment do you need to make? $ ________. Round to the nearest dollar.
You are buying a house and will borrow $225,000 on a 30-year fixed rate mortgage with monthly payments to finance the purchase. Your loan officer has offered you a mortgage with an APR of 4.55 percent. Alternatively, she tells you that you can "buy down" the interest rate to 4.35 percent if you pay points up front on the loan. A point on a loan is 1 percent (one percentage point) of the loan value. How many points, at most, would you be willing to pay to buy down the interest rate? (Do not round intermediate calculations and round your answer to 3 decimal places, e. g., 32.164.)

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