Jessie is considering purchasing a new car for $30,000. The dealer is offering 2 options on the purchase: Option 1. Receive a $5,000 rebate on the price of the car and finance the balance over 5 years at 4% interest. or Option 2. Finance the vehicle for 6 years at 0% interest but no interest.   Question: What is the the monthly payment that Jessie has to pay for option 1? Question: What is the total cost of the cash rebate option (option 1)? Question: What is the the monthly payment that Jessie has to pay for option 2? Question: Which option would you recommend? Why?

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A: Given:

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A: in this we have to calculate total interest to be paid and total principal and then monthly payment.

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A: Therefore, the monthly payment for option A is $314.71.

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A: The first step is to determine the amount of the loan. This is done by subtracting the down payment…

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A: Given that, Cost of car = $25,500 Number of instalments = 7 Interest rate = 8%

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A: Formula for simple interest  Future value =Principal + interest rate x number of years

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A: Given, Option A: $12,000 for 3 years Option B: $1000 per month for 3 years.

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A: Note for 240 days  Value of Note = $9,000 Interest rate = 7% Third party note = $9,108 Time period…

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A: Given, The loan amount is $48,000 rate is 3.95% Term is 3 years

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A: Cost of house = $ 250,000 Down payment = 15%

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.