You bought a new car for $40,000 paying 10% down and financed the rest with a 36-month loan. What monthly payments are required to amortize the loan if you borrowed at an annual interest rate of 6.9%? O $1,112.40 O $1,050.19 O $1.095.19 O $1,109.93. *8

You bought a new car for $40,000 paying 10% down and financed the rest with a 36-month loan. What monthly payments are required to amortize the loan if you borrowed at an annual interest rate of 6.9%? O $1,112.40 O $1,050.19 O $1.095.19 O $1,109.93. *8

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

See similar textbooks

Related questions

Q: Question 2: Consider two risky assets, S and B, with the following characteristics: E(rs) 9%, Os 20%…

A: A risk-free portfolio is a collection of investments that guarantees no loss of principal and offers…

Q: American Biodyne (AB) is considering expanding into a new line of business. The expansion will…

A: Equipment's cost = $500,000Cost of installation = $300,000Revenue (1-3 years) = $650,000Revenue (4-8…

Q: Project requires an initial outlay at t = 0 of $65,000, its expected cash inflows are $12,000 per…

A: Modified Internal Rate of Return(MIRR) refers to the financial measure which helps in determining…

Q: ertha and Martha are twins, and just graduated from college. They plan to retire in 40 years. To…

A: In order to answer the question, we must see the amount per month invested and for the period of…

Q: You are saving for the college education of your two children. They are two years apart in age; one…

Q: You are offered an annuity that will pay $10,000 a year for ten years (that is, ten payments), but…

Q: Consider a $100,000, 30-year, 6.6% mortgage with monthly payments. What portion of the payments…

A: A mortgage refers to a covered loan borrowed to purchase a property with the property itself acting…

Q: Interest Rate Sensitivity A bond trader purchased each of the following bonds with a face value of…

A: Bond valuation is the process of determining the fair market value of the bond. This involves…

Q: Suppose that California Co., a U.S. based MNC, seeks to capitalize a difference in interest rates…

A: Final Answer: If California Co. borrowed these euros at the prevailing rate of 0.50% percent, they…

Q: You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend…

A: Dividevds are conveyances of a company's benefits to its shareholders, paid out frequently,…

Q: Stella places a market order with her broker to buy 1000 shares of OneWorld Corp. The broker buys…

A: Number of shares = 1000 sharesPurchase price = $16.70 eachSelling price = $17.75 eachCommission =…

Q: Suppose that California Co., a U.S. based MNC, seeks to capitalize a difference in interest rates…

A: Initial Investment:California Co. initially invests $200,000.Euro Loan:California Co. converts the…

Q: A couple buys $8000 worth of furniture and takes advantage of the furniture company's "don't pay a…

A: Monthly payment refers to an amount that is paid every month for the repayment of a loan amount…

Q: A delivery car had a first cost of $36000, an annual operating cost of $18000, and an estimated…

A: Annual worth consist of the annual operating cost and equivalent annual cost of first cost with…

Q: 3 Galaxy Air, previously a no-growth firm, has two million shares outstanding. Until now, it…

A: The current market value of a single share of stock in a publicly listed firm is known as the stock…

Q: A mining company is considering a new project. Because the mine has received a permit, the project…

A: Net Present Value is one of the modern capital budgeting techniques. It is calculated using the…

Q: PLEASE PUT IT IN EXCEL, IT HAS TO BE IN EXCEL NO OTHER WAY OTHER THEN IN EXCEL. USE EXCEL! Question…

A: The objective of the question is to determine if it is possible to create a portfolio with zero risk…

Q: You have an outstanding student loan with required payments of $500 per month for the next 4 years.…

A: Contracts in which one party borrows money from the other with the promise to pay back the amount…

Q: An all-equity-financed firm plans to grow at an annual rate of at least 24%. Its return on equity is…

A: Sustainable Growth rate = 24% = 0.24Return on equity (ROE) = 45% = 0.45

Q: In 2021, a basketball player signed a contract reported to be worth $60.8 million. The contract was…

A: Present Value is the current price of future value which will be received in near future at some…

Q: A few years ago, Simon Powell purchased a home for $230,000. Today, the home is worth $410,000. His…

A: A mortgage is a loan provided by a bank or financial institution to help individuals purchase a home…

Q: Calculate the bond equivalent yield and effective annual return on a negotiable CD that is 120 days…

A: A bond is a kind of debt security issued by the government and private companies to the public for…

Q: Which of the following statements is CORRECT? A. Foreign exchange dealers earn a profit by bringing…

A: Foreign exchange (forex) trading involves the buying and selling of currencies on the global market.…

Q: Southern Home Cooking just paid its annual dividend of $.75 a share. The stock has a market price of…

A: The rate of return a business needs to convince investors to assume the risk of purchasing its…

Q: For the following stream of free cash flows, calculate the NPV if the discount rate is 11.9%. Year…

A: It is the difference between the cash outflow and the discounted cash inflow. The usual rule of NPV…

Q: Oscorp's Norman Special Long Bond have coupon rate of 0.50% and pay the coupon a semi- annual basis.…

A: Price of bond is the present value of coupon payment plus present value of par value of the bond.

Q: Please clearly and thoroughly explain the steps on how you determine the expected…

A: The levered NOI is the property's net operating income (NOI) after accounting for the interest…

Q: You are buying your first condo for $250, 000 and you will make a $50, 000 down payment. You have…

A: Loan amount = Purchase price - Down paymentMonthly interest rate = Nominal interest rate / Number of…

Q: (Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation) Fingen's 19-year $1,000 par value…

A: Bond price is the sum of interest payments and maturity value discounted at yield to maturityBond…

Q: Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they…

A: Original cost of A = $12,000Original cost of B = $24,000Labor per year for A = $2,000Labor per year…

Q: Manshukh

A: The objective of this question is to calculate the capital gain rate for a stock transaction. The…

Q: Q1. The manager has decided to purchase a new $30,000 mixing machine. The machine may be paidfor in…

A: Cost = $30,000Discount = 3%Payment today = $5,000Payment after one year = $8000Payment at the end of…

Q: Annuity Payment and EAR You want to buy a car, and a local bank will lend you $20,000. The loan…

A: We need to use loann amortization formula below to calculate monthly payments. where P=Loann=number…

Q: A stock is bought for $22 and sold for $26 one year later, immediately after it has paid a dividend…

A: Purchase Price = p = $22Seling Price = s = $26

Q: Using the information in the tables above, please calculate the expected excess return for this…

A: The capital asset pricing model aids analysts and investors in calculating the expected return on…

Q: VALUE OF EURO (U.S. dollars per euro) 1.9 1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 0 50 100 150 200 250 300…

A: At an exchange rate of 1.5 per euro, the quantity of euros demanded is 300 billion euros, while at…

Q: Consider the following table for a period of six years: Year 1225528 3 4 6 Returns Large-Company…

A: Average return is the simple mean of the given set of returns from the stock.Standard deviation is…

Q: warned not to ignore the cross- product between the real rate and inflation. A 6 - year security…

A: average rate of inflation refers to the interest rate on the basis of the average that is being…

Q: You are contemplating investing some surplus funds and the following options are available: Show…

A: Future value refers to the estimated worth of something at a later point in time. It's commonly used…

Q: A firm purchases 150 acres of land for $195,000 and agrees to remit 17 equal annual end-of - year…

A: Present value is the current worth of a future sum of money, calculated by discounting the future…

Q: en Machine Tools has total assets of $3,130,000 and current assets of $866,000. It turns over its…

A: The objective of the question is to calculate the return on stockholders' equity for Machine Tools.

Q: Bill Clinton reportedly was paid an advance of $10.0 million to write his book My Life. Suppose the…

A: Net present value is a financial metric that helps evaluate the profitability of an investment by…

Q: (Present value of annuities and complex cash flows) You are given three investment alternatives to…

A: To calculate the present values of investments A, B, and C at an annual discount rate of 21 percent,…

Q: K At the beginning of 2007 (the year the iPhone was introduced), Apple's beta was 1.51 and the…

A: The objective of the question is to determine whether Apple's managers exceeded their investors'…

Q: ● ● Bob Marley Inc issues a $1000 face value zero coupon bond The initial price for the bond is $714…

A: The objective of the question is to find the annual interest rate for a zero coupon bond issued by…

Q: DRK, Incorporated, has just sold 140,000 shares in an initial public offering. The underwriter's…

A: Shares sold/issued = N = 140,000Explicit fees = 84,000Offering price = 54 per shareChange in share…

Q: United Builders wants to maintain a target capital structure with 30% debt and 70% equity. Its…

A: Capital budgeting involves making big financial decisions for a company. It involves evaluating and…

Q: Paul obtained a loan of $37,500 at 4.60 % compounded monthly. How long will it take to settle the…

A: Loans have to be paid off in the form of fixed periodic payments. Here the loans are being paid in…

Q: Matterhorn Mountain Gear is evaluating two projects with the following cash flows: Year Project X…

A: The interest rate, also known as the discount rate, is the rate used to determine the present value…

Q: You are going to value Lauryn's Doll Company using the FCF model. After consulting various sources,…

A: We need to use assets beta formula below to calculate value.

Concept explainers

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.

Question

You bought a new car for $40,000 paying 10% down and financed the rest with a 36-month loan. What monthly payments are required to amortize the loan if you borrowed at
an annual interest rate of 6.9%?
O $1,112.40
O $1,050.19
O $1.095.19
O $1,109.93.
14
*N

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Explanation of a loan

VIEW

Step 2: Calculation of the monthly payment required

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?
You bought a house for $400,000 paying 10% down and financing the rest with an 8.5%, 30-year mortgage loan. What monthly payments are required to amortize the loan? O $2,768.09 O $2,718.29 O $2,727.09 O $2,708.09.
You plan to borrow $40,100 at a 6.9% annual interest rate. The terms require you to amortize the loan with 7 equal end-of-year payments. How much interest would you be paying in Year 2? O a. $2,446.20 O b. $2,479.22 O c. $2,766.90 O d. $6,936.17 O e. $7,414.76
You have just purchased a car and taken out a $50,000 loan. The loan has a five-year term with monthly payment and an APR of 5.5%. 1. What is the monthly interest rate? А. 2.75% В. 0.46% О С. 0.015% O D. 1.38%
You plan to borrow $37,200 at a 7.2% annual interest rate. The terms require you to amortize the loan with 7 equal end-of-year payments. How much interest would you be paying in Year 2? O a. $2,678.40 O b. $2,370.79 O c. $2,404.40 O d. $6,950.78 Oe. $6,483.94
You want to take out a $250,000 mortgage (home loan). The interest rate on the loan is 5% and the loan is for 25 years. How much will your semi- monthly payments be? a. $655 $622 c. $730 O d. $680 e. $752 O b.
You plan to borrow $47.400 at a 7.5% annual interest rate. The terms require you to amortize the loan with 7 equal end-of-year payments. How much interest would you be paying in Year 2? a. $3,623.01 b. $2,992.92 c. $2,835.40 Od. $2,520.35 e. $3,150.44
You plan to borrow $33,100 at a 7.0% annual interest rate. The terms require you to amortize the loan with 7 equal end-of- year payments. How much interest would you be paying in Year 2? O a. $2,077.39 b. $2,049.26 c. $6,141.81 d. $2,317.00 e. $5,740.01
Suppose you borrow $15,000 and then repay the loan by making 12 monthly payments of $1,297.92 each. What rate will you be quoted on the loan? NO EXCEL
Suppose that you borrowed $300,000 to buy a house. a. You pay 3.37% interest rate for a 30-year loan. Create an amortization table with a spreadsheet, which clearly shows the monthly payment and how much you would pay in total interest over the whole loan. monthly payment = $ 1,325.46 total interest paid = $ 177,165.05
Suppose you borrow $29 thousand for 54 months to purchase a car. The loan has a rate of 7% with add-on interest payments. What are the total payments over the life of the loan, to the nearest $1? Drop the $ sign
Your bank offers to lend you $120,000 at an 6.5% annual interest rate to start your new business. The terms require you to amortize the loan with 10 equal end-of- year payments. How much interest would you be paying in Year 2? $16,692.56 O $19,068.53 O $10,428.81 O $18,161.67 O $17,254.82