Your friends were excited to hear you have chosen accounting for a career. They have several practical questions regarding money and interest (time value of money). Please assist your friends by answering their respective questions.For each question:A. Estimate without using a table, calculator, etc.B. Document the “step-by-step” detail showing them how you solved the question.**NOTE: To solve use one of the following:**- EXCEL- Business calculator- Text tables (not recommended).Include all the detailed steps for whichever tool you choose. For example, if using EXCEL show all formulas (copy so reader could duplicate your work). If using a business calculator, in detail in proper order show numbers and buttons you input to obtain your answer.C. Provide a one to three sentence written explanation to your friend explaining the basic time value of money concept(s) impacting the solution.**Problems start with “Friend #1” at the top of page 2.** **Car Loan Calculation Guide****Scenario:**A friend is considering purchasing a used car for $8,500. The dealer offers to finance the car over four years at an interest rate of 5%, with no down payment required.**Objective:**Determine the monthly payment for the car loan.**Sections:****A. Calculation Table:**- This section is reserved for mathematical calculations and step-by-step breakdowns of the loan process. - It should include: - Principal amount - Interest rate - Loan term - Monthly payment calculation using the formula for an amortizing loan.**B. Graph/Diagram Area:**- This section is shaded and intended for visual representation.- Possible inclusions: - Amortization schedule graph showing the balance decreasing over time. - Pie chart depicting the proportion of principal vs. interest over the loan term.**C. Summary Table:**- This section is dedicated to summarizing the findings and key information.- It should include: - Total payments - Total interest paid - Monthly payment amount - Comparison with alternative financing options, if available.**Purpose:**This guide helps users understand the financial implications of taking out a car loan and provides practical application of interest calculation in real-life scenarios.

Car Loan Loan Amount = $8500 Number of years = 4 Number of months = 4*12 =48 Annual interest rate = 5% Monthly interest rate = 5%/12A) Using annuity formula, monthly payment on the loan can be calculated as below: Answer: The monthly payment would be $195.75B) Monthly payment on the loan of $800 can be calculated in the excel as below: Answer: using Excel formula, the monthly payment would be $195.75C) Time Value of Money says that a dollar today is worth more anytime later. This is because the money has earning capacity. When taking loan, the amount given to the borrower will earn interest and the issuer will earn that amount from the borrower. In annuity a regular installment or payments are made for a definite period. When the payment are made at the end of the period, they are referred to as ordinary annuity. In the above case, the loan of $8500 is taken and interest is earned by the issuer. The borrower keeps paying the principal and interest amount as annuity and gradually decreases its outstanding balance. Towards the end of the loan payment, more and more principal is being paid to finish the loan.

Business

Finance

Friend #1 – Car Loan – What will by my monthly payment if I purchase a used car for $8,500? The dealer has offered to finance the purchase (car loan) over four years at 5%. No down payment is required.

Friend #1 – Car Loan – What will by my monthly payment if I purchase a used car for $8,500? The dealer has offered to finance the purchase (car loan) over four years at 5%. No down payment is required.

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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Loan A B с Principal $7,000 $7,000 $7,000 Annual payment $2,914.24 $2,256.61 $1,846.48 Term (years) 3 345 4
Use the following to answer questions 31 – 33 You want a new car. At the dealership, you find a car that you like. The dealership gives you two payment options: 1. Pay $23,000 in cash for the car today...OR Pay $370.41 at the end of each month for six years at 5% (0.41667% monthly for 72n). 2. How much CASH (in total) up paying if you choose to make monthly 31. $ will you end payments for the car? 32. How much interest (in total) $ will you pay if you choose to make payments instead of paying cash for the car today? 33. $ How much interest has accrued by the time the first car payment is due (round to two decimal places)?
3. Chrissy is looking to buy a new bedroom set for $9674.99 She would also have to pay a $300 delivery fee. She is considering the following two credit options: Financing through the store at 3.7%, compounded monthly for a term of 2 years, with the 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? b. What is the total payment for each option? c. Which option should she choose and why? d. Why might she choose the other option?
Please answer with explanation. I will really upvote
jagdish
QUESTION 1 Liam can afford $175 per month as a car payment. If Liam can get an auto loan at 4% interest for 5 years, how expensive of a car can Liam afford? Give your answer to the nearest dollar.
Problem 2: Judy gets financing for a home loan on a $900,000 single bedroom, one bath 500 sq ft. home in a great part of Santa Cruz (near the Boardwalk). She can amortize the $900,000 at 7.5% for 30 years. What are the monthly payments of the loan? Be sure to circle answer. Round answer to nearest whole dollar.
question 6
Save Answer Mike is able to pay a monthly 30-year mortgage payment of $1,800. After shopping around, he found a bank that will loan him money at a 4.8% annual interest rate, compounded monthly. What is the most expensive home Mike can afford? Enter your answer as a numerical value (no labels) and round to the nearest dollar.
f3
Bha

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