Kimberly Jensen of Storm Lake, Iowa, wants to buy some living room furniture for her new apartment. A local store offered credit at an APR of 16 percent, with a maximum term of four years. The furniture she wishes to purchase costs $3,600, with no down payment required. Using Table 7-2 or the Garman/Forgue companion website, make the following calculations (round all intermediate calculations to two decimal places): What is the amount of the monthly payment if she borrowed for four years? Round your answer to the nearest cent.
Kimberly Jensen of Storm Lake, Iowa, wants to buy some living room furniture for her new apartment. A local store offered credit at an APR of 16 percent, with a maximum term of four years. The furniture she wishes to purchase costs $3,600, with no down payment required. Using Table 7-2 or the Garman/Forgue companion website, make the following calculations (round all intermediate calculations to two decimal places): What is the amount of the monthly payment if she borrowed for four years? Round your answer 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
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Kimberly Jensen of Storm Lake, Iowa, wants to buy some living room furniture for her new apartment. A local store offered credit at an APR of 16 percent, with a maximum term of four years. The furniture she wishes to purchase costs $3,600, with no down payment required. Using Table 7-2 or the Garman/Forgue companion website, make the following calculations (round all intermediate calculations to two decimal places):
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What is the amount of the monthly payment if she borrowed for four years? Round your answer 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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