They are considering trading their car in for a newer used vehicle so that Harry can have dependable transportation for commuting to work. The couple still owes $4,770 to the credit union for their current car, or $265 per month for the remaining 18 months of the 48-month loan. The trade-in value of this car plus $1,000 that Harry earned from a freelance interior design job should allow the couple to pay off the auto loan and leave $1,400 for a down payment on the newer car. The Johnsons have agreed on a sales price for the newer car of $23,000. The money planned for tires will be spent for other incidental taxes and fees associated with the purchase. 1. Using the Garman/Forgue companion website or the information in Table 7-2, calculate the monthly payment for a loan period of three, four, five, and six years at 8 percent APR. Round your answers to the nearest cent. Round Monthly Installment Payment for a Loan in intermediate calculations to the nearest cent.
They are considering trading their car in for a newer used vehicle so that Harry can have dependable transportation for commuting to work. The couple still owes $4,770 to the credit union for their current car, or $265 per month for the remaining 18 months of the 48-month loan. The trade-in value of this car plus $1,000 that Harry earned from a freelance interior design job should allow the couple to pay off the auto loan and leave $1,400 for a down payment on the newer car. The Johnsons have agreed on a sales price for the newer car of $23,000. The money planned for tires will be spent for other incidental taxes and fees associated with the purchase. 1. Using the Garman/Forgue companion website or the information in Table 7-2, calculate the monthly payment for a loan period of three, four, five, and six years at 8 percent APR. Round your answers to the nearest cent. Round Monthly Installment Payment for a Loan in intermediate calculations to the nearest cent.
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
They are considering trading their car in for a newer used vehicle so that Harry can have dependable transportation for commuting to work. The couple still owes $4,770 to the credit union for their current car, or $265 per month for the remaining 18 months of the 48-month loan. The trade-in value of this car plus $1,000 that Harry earned from a freelance interior design job should allow the couple to pay off the auto loan and leave $1,400 for a down payment on the newer car. The Johnsons have agreed on a sales price for the newer car of $23,000. The money planned for tires will be spent for other incidental taxes and fees associated with the purchase.
1. Using the Garman/Forgue companion website or the information in Table 7-2, calculate the monthly payment for a loan period of three, four, five, and six years at 8 percent APR. Round your answers to the nearest cent. Round Monthly Installment Payment for a Loan in intermediate calculations to the nearest cent.
Transcribed Image Text:Table 7-2
APR+
12
5 $85.61
6
7
8
9
10
11
12
13
14
15
16
618
17
18
19
20
Monthly Installment Payments for a Loan
(Principal and Interest Required to Repay $1,000*)
Number of Monthly Payments
24
36
48
60
72
$43.87
$29.97 $23.03 $18.87
$16.10
86.07 44.32
30.42
23.49
19.33
16.57
86.53
44.77
30.88
23.95
19.80
17.05
86.99
45.23
31.34 24.41
20.28 17.53
87.45
45.68
31.80
24.88
20.76 18.03
87.92
46.14 32.27
18.53
88.38
46.61
32.74
19.03
88.85 47.07
33.21
19.55
89.32
89.79
90.26
90.73
91.20
91.68
92.16
92.63
47.54
33.69
48.01
34.18
48.49 34.67
48.96
35.16
49.44
35.65
49.92
36.15
50.41
36.66
50.90 37.16
25.36 21.25
25.85
21.74
26.33
22.24
26.83
22.75
20.07
27.33
23.27
20.61
27.83 23.79
21.14
28.34
24.32
21.69
28.85
24.85
22.25
29.37 25.39 22.81
29.90
25.94
23.38
30.43
26.49 23.95
84
$14.13
14.61
15.09
15.59
16.09
16.60
17.12
17.65
18.19
18.74
19.27
19.86
20.44
21.02
21.61
22.21
"To illustrate, assume an automobile loan of $14,000 at 8 percent for five years. To repay $1,000, the monthly payment
is $20.28; therefore, multiply $20.28 (8% row and 60-month column) by 14 to give a monthly payment of $283.92. For
amounts other than exact $1,000 increments, simply use decimals. For example, for a loan of $14,500, the multiplier would
be 14.5.
*For fractional interest rates of 5.5, 6.5, 7.5, and so on, simply take a monthly payment halfway between the whole-
number APR payments. For example, the payment for 48 months at 9.5 percent is $25.12 ($25.36 $24.88 = $0.48;
$0.48/2 = $0.24; $0.24 + $24.88 $25.12).
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