You are on your way to the local automobileoutlet to buy a car. The price of the car is$20,000. You have carefully evaluated yourfinances, and you have determined that youcan afford payment that total $5,500 per yearif you take bank loan. The bank loan would beoutstanding for a period of four years and thepayments would be made annually. Localbank is charging 12% on automobile loan.Prepare a loan amortization table for 4 years.Do you think, you can afford paying theannual payment? [Show calculation of PMT,Interest, principle payment, ending balance(only for the 1st year)]

To prepare the amortization table, we first need to calculate the annual payment, which can be…

Answered: You are on your way to the local…

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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You have just completed your bachelor’s degree in business and applied for a job with a local bank. As part of its evaluation process, you must take an examination on time value of money analysis covering the following questions: A. What’s the future value of $1200 after 3 years if it earns 10%, annual compounding? What is the present value of $1200 to be received in 3 years if the interest rate is 10%, annual compounding? What annual interest rate would cause $1000 to grow to $1250 in 3 years? B. What’s the difference between an ordinary annuity and an annuity due? What is the future value of a 3-year, $1000 ordinary annuity if the annual interest rate is 10%? What is its present value? What would…
You want to buy a car, and a local bank will lend you $40,000. The loan will be fully amortized over 10 years, and the nominal interest rate will be 8% with interest paid annually. 1: What will be the annual loan payment? 2: Construct Amortization Schedule Table.
Assume that you are on your way to purchase a new car. You have already applied and been accepted for an automobile loan through your local credit union. The loan can be for an amount up to $25,000, depending on the final price of the car you choose. The terms of the loan call for monthly payments for a period of four years at a stated interest rate equal to 6 percent. After selecting the car you want, you negotiate with the sales representative and agree on a purchase price of $24,000, which does not include any rebates or incentives. The rebate on the car you 24 chose is $3,000. The dealer offers “0% financing,” but you forfeit the $3,000 rebate if you take the “0% financing.” a. What are the monthly payments that you will have to make if you take the “0% financing”? (Hint: Because there is no interest, the total amount that has to be repaid is $24,000, which also equals the sum of all the payments.) b. What are the monthly payments if you finance the car with the credit union loan?…
Zachary Porter of Abilene, Kansas, is contemplating borrowing $10,000 from his bank. The bank could use the add-on method to calculate different borrowing options. Calculate the finance charge and monthly payment for the following 7%, 4 Years: Finance Charge
You have a unique account in your local bank If you deposit $7,000 today, the bank will pay you an annual interest rate of 5.5 percent for 4 years, 6.5 percent for 3 years, and 7 percent for 7 years How much will you have in your account is 14 years? Answer is: Dollars
You want to save for a new car so you make payments of $573 at the end of every month into the bank. When you receive your birthday present every year, you put an extra $1620 into a payment on Dec 31 (at the end of the year). The interest rate on your account is 4% compounded semiannually. Assume today is January 1, and that you are going to purchase this new car with cash only in seven years. What is the value of your new car?The value of the new car is $
You consider financing the purchase of a new $159,900 sports car from a local luxury car dealership. The loan specifications establish a three-year term and a 9.2 percent APR. The buyer is required to make monthly payments starting immediately after approval. What is the expected payment of this loan?
You decide to purchase your own property. The estimated purchase price is $1,600,000. You obtain 90% financing from the bank, 7% fixed rate for 25 years. How much do they have to pay the bank every year? How much do you still owe the bank in 14 years?
A customer of your bank comes for a car loan 10000 OMR. He is charged with an interest rate of 5% per year. The customer expects a monthly repayment schedule from you, to plan his repayment. Provide a loan amortization schedule for a monthly repayment of 1 year. (Amortization factor is 0.952 )
You will usually have choices of interest rates and loan term when seeking a loan. For the following, calculate the monthly payment and total interest over the loan term with each option.You need a $20,000 to buy a used car. Your bank offers a 3 year loan at 5%, a 4 year loan at 6%, and a 5 year loan at 7%.3 year loan at 5%: Monthly payment: $ Total: $ Total interest: $ 4 year loan at 6%: Monthly payment: $ Total: $ Total interest: $ 5 year loan at 7%: Monthly payment: $ Total: $ Total interest: $
You decide to do some remodeling in the kitchen. Your parents agree to lend you the money, but you insist on paying them interest. The agreement is that they will lend you $6000.00 at a simple interest rate of 1.5% per year. In how many months will the interest be $360.
A car dealership is offering to roll over the amount owed on your car into a new loan so you can purchase a new car. Suppose you owe $5,406.77 on your current car and have agreed to a new car whose total cost, including tax and license, is $29,905.87. You are getting a 5-year loan at an annual interest rate of 4.75%. What are your new monthly payments (in dollars)? (Round your answer to the nearest cent.)

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