Ellen is shopping for a truck and has up to $325 to spend biweekly at a dealership in Selkirk, MB where the PST + GST is 12%. She wants to pay the truck off in 5 years. She has a down payment of $1400. The dealership will finance the truck at an interest rate of 4.95%. a. How expensive a truck can Ellen afford to buy? b. How much interest will Ellen pay over the course of the loan?

Ellen is shopping for a truck and has up to $325 to spend biweekly at a dealership in Selkirk, MB where the PST + GST is 12%. She wants to pay the truck off in 5 years. She has a down payment of $1400. The dealership will finance the truck at an interest rate of 4.95%. a. How expensive a truck can Ellen afford to buy? b. How much interest will Ellen pay over the course of the loan?

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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Kayla Thompson is married and currently rents an apartment for $650 per month and paying $375 annually for renter's insurance. Her landlord required a $1,000 security deposit on the apartment. She just found a small townhouse she can buy for $285,000. She has enough cash for a $10,000 down payment and $4,100 in closing costs. Her bank is offering 30-year mortgages at a 6 percent annual rate. Kayla estimated the following costs as a percentage of the home's price: property taxes, 2.5 percent; homeowner's insurance, 0.5 percent; and maintenance, 0.7 percent. She is in the 25 percent tax bracket, has an after-tax rate of return on invested funds of 4 percent, and expects the townhouse to appreciate 3 percent per year. Using Worksheet 5.2, calculate the cost of each alternative and recommend the least costly option - rent or buy - for Kayla. Assume that Kayla uses the standard deduction of $24,000. Round the answers to the nearest dollar. Cost of renting: $ Cost of buying: $ Kayla…
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