Mr. Smith wants to buy a new car that willcost $35,000. He will make a down payment in theamount of $15,000. He would like to borrow theremainder from a bank at an interest rate of 12%compounded monthly. He agrees to pay off the loanmonthly for a period of five years. Select the correctanswer for the following questions:(a) What is the amount of the monthly payment A?i. A = $20,000(A/F, 1%, 60)ii. A = $20,000(A/P, 12%, 5)/12iii. A = $20,000(A/P, 1%, 60)iv. A = $4,000(A/F, 12%, 5)/12(b) Mr. Smith has made 36 payments and wants tofigure out the balance remaining immediatelyafter the 36th payment. What is that balance?
Mr. Smith wants to buy a new car that willcost $35,000. He will make a down payment in theamount of $15,000. He would like to borrow theremainder from a bank at an interest rate of 12%compounded monthly. He agrees to pay off the loanmonthly for a period of five years. Select the correctanswer for the following questions:(a) What is the amount of the monthly payment A?i. A = $20,000(A/F, 1%, 60)ii. A = $20,000(A/P, 12%, 5)/12iii. A = $20,000(A/P, 1%, 60)iv. A = $4,000(A/F, 12%, 5)/12(b) Mr. Smith has made 36 payments and wants tofigure out the balance remaining immediatelyafter the 36th payment. What is that balance?
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
Related questions
Question
Mr. Smith wants to buy a new car that will
cost $35,000. He will make a down payment in the
amount of $15,000. He would like to borrow the
remainder from a bank at an interest rate of 12%
compounded monthly. He agrees to pay off the loan
monthly for a period of five years. Select the correct
answer for the following questions:
(a) What is the amount of the monthly payment A?
i. A = $20,000(A/F, 1%, 60)
ii. A = $20,000(A/P, 12%, 5)/12
iii. A = $20,000(A/P, 1%, 60)
iv. A = $4,000(A/F, 12%, 5)/12
(b) Mr. Smith has made 36 payments and wants to
figure out the balance remaining immediately
after the 36th payment. What is that balance?
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