Chrissy is looking to buy a new bed delivery fee. She is considering the following two credit options: Financing through the store at 3.7%, compounded monthly for a term of incentive that the dealership will remove the shipping charge AND give a $500 rebate. . A bank loan at 3.5%, compounded monthly, for a term of 3 years. a. What are the monthly payments for each option?

Chrissy is looking to buy a new bed delivery fee. She is considering the following two credit options: Financing through the store at 3.7%, compounded monthly for a term of incentive that the dealership will remove the shipping charge AND give a $500 rebate. . A bank loan at 3.5%, compounded monthly, for a term of 3 years. a. What are the monthly payments for each option?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 15P

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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:
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2.They decide to shop for furnishings for the new house. They choose items that amount to $2400.00. The store has 2 fixed installment loan options for purchasing: Option 1: 20% down payment and financing at 7% simple interest per year for 2 years. Option 2: no down payment and financing at 7.75% simple interest for 3 years. Answer each of the following questions separately, showing all your work to reach each answer. A. Which option will result in smaller total finance charge? What will that total finance charge be? B. Which option will result in the smaller monthly payment? What will that monthly payment be? C. They decide to defer any purchases and invest in a savings account a $2400 bonus that Maria will be getting from work. The rate is 1.5% interest compounded every month. How much interest will they earn in 3 years? D. They decide to defer any purchases and loan the $2400bonus to a needy relative at 3% simple interest per year. How long will the term of the…