Suppose you would like to purchase a new mustang GT. The sticker price of the mustang you want is $40000. The dealer is able to give you an APR of 4% for 5 years. How much will your monthly payments be? How much will you have paid in interest once the loan is paid off?

Q: You want to buy a $260,000 home. You plan to pay $26000 as a down payment, and take out a 30 year…

A: When a person does not have enough money to buy any assets, he would consider taking a loan. The…

Q: a) How much is the loan amount going to be? b) What will your monthly payments be? c) How much…

A: Loan payments can be paid off in periodic payments. To understand the periodic payments the loan…

Q: You need a 30 year fixed rate mortgage to buy a new home for $400,000. Your mortgage bank will lend…

A: Mortgage/ Borrowings Borrowings are the loan which is taken by the individual to meet its financial…

Q: You want to buy a $191,000 home. You plan to pay 15% as a down payment, and take out a 30 year loan…

A: Cost of home = $191,000Down payment = 15%Loan terms = 30 yearsInterest rate = 7%

Q: You want to buy a $240,000 home. You plan to pay 20% as a down payment, and take out a 30 year loan…

A: Home value = $240,000 Down payment = $48,000 (i.e. $240,000 * 0.20) Monthly period (n) = 360 (i.e.…

Q: Suppose you can afford to pay $ 250 a month for 8 years towards a new car with no down payment. If…

A: Given details are : Monthly payment = $250 Time period = 8 years Interest rate = 4.75% We need to…

Q: You want to buy a car, and a local bank will lend you $15,000. The loan will be fully amortized over…

A: A loan is an agreement between two parties where an amount is forwarded in exchange for a promise of…

Q: You want to buy a $255,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan…

A: Amount of home = $255,000 Down payment = 5%  The time duration of the loan = 30 years

Q: you wish to purchase real property. the lender will give you a 250000 fixed rate 30 year mortgage at…

A: Mortgage amount = $250000Mortgage term = 30 YearsRate of interest = 3.5% per annumwe are required to…

Q: you want to buy a car for $8300 with $360 monthly payments for 4 years, what is the annual interest…

A: Interest rate is the rate which the customer would have to pay on the periodic payment of the…

Q: You want to buy a $260,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan…

A: a) Loan Amount = Total price of house - Down payment  = 260,000 - (260,000 * 5%) = 260,000 - 13,000…

Q: You have decided to buy a car, the price of the car is $18,000. The car dealer presents you with two…

A: Future Value (FV) and Present Value (PV) are concepts used in TVM (Time Value for Money) analysis…

Q: A car dealer sells a new car for $18000. He also offers to sell the same car for payment of $375 per…

A: We take loans when buying large ticket items like a car, a bike, a house etc. The loan is repaid in…

Q: You want to buy a car, and a local bank will lend you $10,000. The loan will be fully amortized over…

A: Given: Loan Amount $10,000Annual Nominal Interest Rate 9%Number of Payments = 5 years * 12 months60…

Q: You are negotiating to buy a new car with a car salesman at a local dealer. You have negotiated the…

A: Loans are paid by monthly payments and these monthly payments carry the payment for interest and…

Q: a $145,000 home. You found a bank that offers a 30-year loan at 3.5% APR. What will be your monthly…

A: A mortgage is a loan used to purchase a property or real estate. The property serves as collateral…

Q: You want to purchase a house valued at $200,000.  After a downpayment, you can finance the house…

A: Value of the house = $200,000 Number of years of mortgage = 20 Number of periods (n) = 20*12 = 240…

Q: Solve the following problems. Round your results to the nearest cent as needed. You need a loan to…

A: P = $24,200 (loan amount),(monthly interest rate),n=6×12 (number of months in 6 years).

Q: You want to buy a car, and a local bank will lend you $40,000. The loan will be fully amortized over…

A: The monthly loan payment can be calculated by using the excel formula ''=PMT''Effective Annual Rate…

Q: You wish to buy a car that has a monthly payment of $250 and with a down payment of $1000. You find…

A: PMT is $250,r is 4.5% or 0.045,n is 5×12 months (5 years converted to months),DP is $1000.

Q: You want to buy a new car. You can afford payments of $250 per month and can borrow the money at an…

A: The term mortgage refers to a type of loan that is for the long term, and it usually has the asset…

Q: After graduating from college and securing your first job in your field of study, you need to…

A: Car price = $92,500Down payment = 2%The amount of loan is

Q: a. What is your annual payment on the loan? b. Construct a mortgage amortization. c. What fraction…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: sidering buying a new car. The sticker price is $15, ment. If you can negotiate an annual interest…

A: In this we need to calculate present value factor and get monthly payment.

Q: You want to buy a car, and a local bank will lend you $20,000. The loan would be fully amortized…

A: The loan is an agreement between two parties where an amount is forwarded on a promise of repayment…

Q: You want to buy a car for $25000 that has to be paid in 5 years. If the car dealer agrees to finance…

A: Working note:

Q: You are considering purchasing a car with a sticker price of $50,000 (nonnegotiable with no down…

A: The amortization of loan refers to systematic, equal and regular repayment of loan. The instalment…

Q: You want to buy a $248,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan…

A: Loan: It represents the amount borrowed by the borrower for the purpose of purchasing assets like…

Q: You want to buy a $169,000 home. You plan to pay 20% as a down payment, and take out a 30 year loan…

A: Cost of home = $169,000Down payment = 20%Interest rate = 4.85%Number of years = 30 years

Q: your client wants to buy a new car. the financing terms are: sticker price: 100,000.00 usd cash…

A: Upfront purchase price = $ 100,000 - 21% discount = 79,000Hence, PV = - 79,000Otherwise under…

Q: If you want to buy a car, and you can afford a monthly payment of $425, how large of a loan can you…

A: Using excel PV function to get the loan amount

Q: Use Excel to answer this question: You want to borrow money from your bank to purchase a car. The…

A: Amount you can borrow = Present value of the maximum monthly paymentsNOTE :here the monthly payment…

Q: You decide that you can spend 600 as a monthly payment for a new car. Your bank offers car loans at…

A: The amount that can be borrowed should equal the present value of future payments. This is based on…

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.