Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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I need help with all of it please :)))
Transcribed Image Text:Bruce goes into a car dealership to purchase a new vehicle. The one he wants to buy costs
$16 000, however he doesn't have that much money in his bank. The salesman offers him
a financing option of a 30% deposit followed by 12 monthly payments of $1150.
(a) Find the amount of the deposit.
(b) Calculate the total cost of the loan under this financing option.
Bruce's father generously offers him an interest free loan of $16000 to buy the car to avoid
the expensive loan repayments. They agree that Bruce will repay the loan by paying his
father $x in the first month and $y every following month until the $16 000 is repaid.
The total amount Bruce's father receives after 12 months is $5200. This can be expressed by
the equation r+1ly :
is $10 600.
5200. The total amount that Bruce's father receives after 24 months
(c) Write down a second equation involving x and y.
(d) Determine the value of x and the value of y.
(e) Calculate the number of months it will take Bruce's father to receive the $16000.
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