I am hoping to buy a new car. The new car that I am hoping to buy costs $27500. I anticipate that the dealer will give me a $3000 credit for trading in my old car, which will reduce the amount that I will need to finance. I am planning on financing the car for 4 years at 3.25%. a. Using the above information, determine the amount of my monthly car payment. After hearing that my car payment will be the amount indicated in part a, I ask the dealer how much my payments would be if I finance the car for 6 years. This makes the car more affordable. b. Determine the monthly payments if I finance the car for 6 years instead of 4 years. c. We all know that even though the payment amounts are lower if I extend the years of the loan, I will pay more in finance charges over time. How much more money would it cost me over the life of the loan if I finance the car for 6 years instead of 4 years?

I am hoping to buy a new car. The new car that I am hoping to buy costs $27500. I anticipate that the dealer will give me a $3000 credit for trading in my old car, which will reduce the amount that I will need to finance. I am planning on financing the car for 4 years at 3.25%. a. Using the above information, determine the amount of my monthly car payment. After hearing that my car payment will be the amount indicated in part a, I ask the dealer how much my payments would be if I finance the car for 6 years. This makes the car more affordable. b. Determine the monthly payments if I finance the car for 6 years instead of 4 years. c. We all know that even though the payment amounts are lower if I extend the years of the loan, I will pay more in finance charges over time. How much more money would it cost me over the life of the loan if I finance the car for 6 years instead of 4 years?

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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We really want a new car and want to know if we can realistically afford it but also see how much interest we would end up paying in totality.If after talking to the sales person and spending a few hours at the dealearship, you were approved for a 42,000 loan with an annual percentage rate of 21.99% for a 7 year loan. What will your monthly payment be?Display in a plot the trajectory of payments over time, and trajectory of interest. Using this plot, when will most of your monthly payments go towards the principal balance and not the interest?
Derek decides to buy a new car. The dealership offers him a choice of paying $588.00 per month for 5 years (with the first payment due next month) or paying some amount today. He can borrow money from his bank to buy the car. The bank requires a 4.00% interest rate. What is the most that he would be willing to pay today rather than making the payments? Submit
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