Kate earns an annual salary of $86,000 and rents a condo for $1,650 per month. She has a student loan with a monthly payment of $450. She is considering the purchase of a new vehicle and current financing for new vehicles include an interest rate of 6.75% for a 5-year loan. The lender that she is considering using requires a back-end ratio of 40%. She has saved $4,000 that she would like to put down on the purchase of the vehicle. What is the maximum vehicle cost she can afford?

Kate earns an annual salary of $86,000 and rents a condo for $1,650 per month. She has a student loan with a monthly payment of $450. She is considering the purchase of a new vehicle and current financing for new vehicles include an interest rate of 6.75% for a 5-year loan. The lender that she is considering using requires a back-end ratio of 40%. She has saved $4,000 that she would like to put down on the purchase of the vehicle. What is the maximum vehicle cost she can afford?

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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Similar questions

Rachel purchased a car for $17,500 three years ago using a 4-year loan with an interest rate of 10.8 percent. She has decided that she would sell the car now, if she could get a price that would pay off the balance of her loan. What is the minimum price Rachel would need to receive for her car? Calculate her monthly payments, then use those payments and the remaining time left to compute the present value (called balance) of the remaining loan.
Laura wants to buy a delivery truck. The truck costs $59,000, and will allow her to increase her after tax profits by $33,000 per year for the next 10 years. She will borrow 98% of the cost of the truck for 10 years, at an interest rate of 6%. Laura's unlevered cost of capital is 11% and her tax rate is 39%. The loan includes a $2,000 application fee. What is the NPV of buying the truck on these terms? Please use the APV method.
Laura wants to buy a delivery truck. The truck costs $124,000 , and will allow her to increase her after tax profits by $18,000 per year for the next 10 years. She will borrow 92% of the cost of the truck for 10 years, at an interest rate of 6%. Laura’s unlevered cost of capital is 12% and her tax rate is 35%. The loan includes a $2,000 application fee. What is the NPV of buying the truck on these terms? Please use the APV method.
Madeline Rollins is trying to decide whether she can afford a loan she needs in order to go to chiropractic school. Right now Madeline is living at home and works in a shoe store, earning a gross income of $960 per month. Her employer deducts a total of $170 for taxes from her monthly pay. Madeline also pays $115 on several credit card debts each month. The loan she needs for chiropractic school will cost an additional $170 per month. Calculate her debt payments-to-income ratio with and without the college loan. (Remember the 20 percent rule.) (Enter your answers as a percent rounded to 2 decimal places.) With college loan Without college loan Debt Payments-to- Income Ratio
Cheryl wants to save for a car. She has $4050 in a savings account earning 2.2% compounded quarterly. If Cheryl has four years until she gets her driver’s license, will she have enough to buy a used car that costs $4500? If not, how much more does she need?
Tobin is buying a new apartment. He can afford a mortgage payment of $1990 a month, and a down payment of $11000. He obtained a 16-year loan at 6.05% compounded monthly. Use Excel to determine what the most expensive apartment he can buy under these terms. How much will Tobin pay in interest over the 16-year years? Apartment price = $ Interest paid = $
Laura wants to buy a delivery truck. The truck costs $142,000 , and will allow her to increase her after tax profits by $33,000 per year for the next 10 years. She will borrow 100% of the cost of the truck for 10 years, at an interest rate of 6%. Laura’s unlevered cost of capital is 15% and her tax rate is 32%. The loan includes a $1,000 application fee. What is the NPV of buying the truck on these terms?
Suppose that you need $30,000 for your last year of college. You could go to a private lending institution and apply for a signature student loan; rates range from 7% to 14%. However, your Aunt Sally is willing to loan you the money from her retirement savings, with no repayment until after graduation. All she asks is that in the meantime you pay her each month the amount of interest that she would otherwise get on her savings (since she needs that to live on), which is 4%.What is your monthly payment to her, and how much interest will you pay her over the year (9 months)?(Fill in the blanks below and give your answers as whole numbers.)The amount of interest per month you would pay Aunt Sally is $__(1)__ .The total interest you will pay her over the year (9 months)is $__(2)__ .
Dana has made a down payment of $100,000 on a recent home purchase for $300,000. She was able to obtain bank financing and pays a fixed annual rate of 6 percent on her 30-year mortgage. If she makes steady, fixed monthly payments, what loan balance will remain after the 47th payment?
Carmen Hernandez has saved $8,000 for a deposit on a car. The highest monthly payment she can afford is $455. The loan will have an APR of 11% payable at the end of each month. She determines which is the most expensive car she can purchase if she buys it on credit payable in 60 months.
Jackson and Svetlana are applying for a $600,000 mortgage to purchase a new house. The monthly payment for this proposed mortgage is $2.839.48. They have told you that they also have a car payment of $1.305 per month, annual car insurance of $1,850, an RRSP contribution of $150 per month by papall deduction a weekly loan payment of $75 and total monthly credit card payments of $320. Their property taxes are $5,884 per year. Their combined income is $155.394 per year and heat on this house is $100 per month What is their TDS? Select one: a.40.00% b. 38.07% c.41.19% d.42.35%

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