You are in a car accident and your car is totaled. You find a new-to-you vehicle for $18,395 that you would like to buy. A) If the sales tax is 6.5% of the purchase price, what is the amount of the sales tax? B) With the sales tax, how much is the vehicle cost altogether? C) If the car license fee is 1.2% of the purchase price, find the amount of the license fee. D) If you were to make a down payment of $2500, find the amount of the loan that you would need. E) Assuming you get a loan for 4 years at an interest rate of 7.5% what amount would you need to borrow with the sales tax and license fee included? F) Taking the answer from E) what would your monthly payments be?
You are in a car accident and your car is totaled. You find a new-to-you vehicle for $18,395 that you would like to buy. A) If the sales tax is 6.5% of the purchase price, what is the amount of the sales tax? B) With the sales tax, how much is the vehicle cost altogether? C) If the car license fee is 1.2% of the purchase price, find the amount of the license fee. D) If you were to make a down payment of $2500, find the amount of the loan that you would need. E) Assuming you get a loan for 4 years at an interest rate of 7.5% what amount would you need to borrow with the sales tax and license fee included? F) Taking the answer from E) what would your monthly payments be?
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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Question
You are in a car accident and your car is totaled. You find a new-to-you vehicle for $18,395 that you would like to buy.
A) If the sales tax is 6.5% of the purchase price, what is the amount of the sales tax?
B) With the sales tax, how much is the vehicle cost altogether?
C) If the car license fee is 1.2% of the purchase price, find the amount of the license fee.
D) If you were to make a down payment of $2500, find the amount of the loan that you would need.
E) Assuming you get a loan for 4 years at an interest rate of 7.5% what amount would you need to borrow with the sales tax and license fee included?
F) Taking the answer from E) what would your monthly payments be?
Expert Solution
Step 1: Define amortized loan
An amortized loan refers to a type of loan that is repaid over a set period through regular installment payments. These payments are usually equal and consist of both principal and interest. As the loan is paid off, the proportion of the payment going towards the principal balance increases, while the portion going towards interest decreases. This ensures that the loan is fully paid by the end of the term.
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