Pretend that you take out a six-year, $35000 car loan at 6% APR compounded monthly. Let's also pretend that you don't like debt so you decide to pay an extra $60 every month to the loan. Last monthly payment clarification when paying extra money to a loan: modify your very last monthly payment so that the loan is paid off (near zero $). All of your monthly payments will be the exact same with one exception: your very last payment will be something less than normal to end the loan. This is what happens in the real world btw when vou regularly pay extra money towards a loan. a. When will the loan be paid off? b. How much money do you save overall by paying a little extra ($60) every month to the loan? (use the Payment column to get your answer.)
Pretend that you take out a six-year, $35000 car loan at 6% APR compounded monthly. Let's also pretend that you don't like debt so you decide to pay an extra $60 every month to the loan. Last monthly payment clarification when paying extra money to a loan: modify your very last monthly payment so that the loan is paid off (near zero $). All of your monthly payments will be the exact same with one exception: your very last payment will be something less than normal to end the loan. This is what happens in the real world btw when vou regularly pay extra money towards a loan. a. When will the loan be paid off? b. How much money do you save overall by paying a little extra ($60) every month to the loan? (use the Payment column to get your answer.)
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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Pretend that you take out a six-year, $35000 car loan at 6% APR
compounded monthly.
Let's also pretend that you don't like debt so you decide to pay an
extra $60 every month to the loan.
Last monthly payment clarification when paying extra money to a loan:
modify your very last monthly payment so that the loan is paid off (near
zero $). All of your monthly payments will be the exact same with one
exception: your very last payment will be something less than normal to
end the loan. This is what happens in the real world btw when vou
regularly pay extra money towards a loan.
a. When will the loan be paid off?
b. How much money do you save overall by paying a little extra
($60) every month to the loan? (use the Payment column to get
your answer.)
Transcribed Image Text:2. Pretend that you take out a six-year, $35000 car loan at 6% APR
compounded monthly.
Let's also pretend that you don't like debt so you decide to pay an
extra $60 every month to the loan.
Last monthly payment clarification when paying extra money to a loan:
modify your very last monthly payment so that the loan is paid off (near
zero $). All of your monthly payments will be the exact same with one
exception: your very last payment will be something less than normal to
end the loan. This is what happens in the real world btw when you
regularly pay extra money towards a loan.
a. When will the loan be paid off?
b. How much money do you save overall by paying a little extra
($60) every month to the loan? (use the Payment column to get
your answer.)
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