You have accepted a loan in an amount of $15,000 for your new car. You have agreed to pay the loan back in four years. What is your monthly payment if you agree to pay an interest rate of 9% compounding monthly?  Solve this problem for i = 6%, i = 7%, and i = 8% each compounding monthly.

Q: You owe $19,000 on student loans at an interest rate of 4.6% compounded monthly. You want to pay off…

A: The amount of loan "PV" is $19,000 The interest rate is 4.6% Compounded monthly The time period is 6…

Q: You would like to buy a new car and will need to borrow $25,000 to do so. Your loan will be repaid…

A: EMI or monthly payment of loans is the payment which the borrower makes every month towards loan…

Q: You have purchased a house and take out a $600,000 loan with a 30 year term at 5% nominal annual…

A: Information Provided: Loan amount = $600,000 Year = 30 Interest rate = 5% compounded monthly

Q: suppose that you would like to save $20,000 over 5 years to use as a down payment for a house by…

A: Computation of monthly deposit:Hence, the monthly deposit into the account is $301.66 per month.

Q: You want to buy a car, and a local bank will lend you $25,000. The loan will be fully amortized over…

A: Monthly Loan Payment = PV*(r*(1+r)n)((1+r)n-1)  where: PV is the present value of the loan r is the…

Q: You want to borrow $25,000 to buy a new car. Your annual interest rate is 6.2% over 4 years with…

A: Given: Loan borrowed = $25,000 Interest rate = 6.2% years = 4

Q: What is the payoff amount for the loan?

A: Present value illustrates the current value of a sum of money that will be received or paid in the…

Q: Assume you graduate from college with $30,000 in student loans. If your interest rate is fixed at…

A: The monthly payment amount can be calculated with the help of present value of annuity function

Q: You have just taken out a $27,000 car loan with a 8% APR, compounded monthly. The loan is for five…

A:

Q: If you borrow $2800 and agree to repay the loan in 5 equal annual payments at an interest rate of…

A: Using excel PMT function to calculate the yearly payment

Q: over 4 years with monthly payments. Calculate your monthly payment.

A: Information Provided: Amount borrowed = $15,000 Interest rate = 3.3% Term = 4 years or 48 months

Q: You borrow $21421 to buy a car. You will have to repay this loan by making equal monthly payments…

A: Formula for calculating EMI: EMI = (P X R/12) X [(1+R/12) ^N] / [(1+R/12) ^N-1] P = Loan amount  r=…

Q: You owe $31,000 on student loans at an interest rate of 5.85% compounded monthly. You want to pay…

A: Information provided: Loan amount = $31000 Annual rate "r"= 5.85% Number of years "n" = 7 Number of…

Q: A woman wants to borrow $10,742 in order to buy a car. She wants to repay the loan by monthly…

A: Formula EMI = PV/[1-(1+R)-N]/R Where EMI - Equal monthly instalment  PV - Loan amount i.e. $10,742 R…

Q: You've been offered a loan of $20000, which you will have to repay in 5 equal annual payments of…

A: Present Value = pv = $20,000Number of Payment = n = 5Payment = p = $6000

Q: You borrow $6,275 from your friend at a nominal interest annual rate of 11.35% compounded weekly.…

A: Loan = 6275 Interest = 11.35℅ Weekly Compounding Number of compounding periods = 52 Annual Repayment…

Q: You want to buy a car, and a local bank will lend you $10,000. The loan will be fully amortized over…

A: Given: Loan Amount $10,000Annual Nominal Interest Rate 9%Number of Payments = 5 years * 12 months60…

Q: You are negotiating to buy a new car with a car salesman at a local dealer. You have negotiated the…

A: Loans are paid by monthly payments and these monthly payments carry the payment for interest and…

Q: You took out a student loan in college and now have to pay $1,900 every year for 20 years, starting…

A: Present Value is the value of all future cash flows discounted at a given rate of interest for the…

Q: You want to buy a car, and a local bank will lend you $40,000. The loan will be fully amortized over…

A: The monthly loan payment can be calculated by using the excel formula ''=PMT''Effective Annual Rate…

Q: You want to buy a new car. You can afford payments of $250 per month and can borrow the money at an…

A: The term mortgage refers to a type of loan that is for the long term, and it usually has the asset…

Q: You borrow $18826 to buy a car. You will have to repay this loan by making equal monthly payments…

A: Borrowed amount is $18826 Time period is 5 years APR is 12% To Find: Monthly payment

Q: ut an $8,000 car loan that calls for 7 annual payments of $2,400 each.  What is the interest rate?

A: Annual payments are made for payment of loan which carry the interest and payment of principal…

Q: Suppose that you borrow $20,000 for four years at 8% toward the purchase of a car. Find the monthly…

A: Given: Amount borrowed = $20,000 Number of years = 4 Interest rate = 8% Compounding frequency = 12

Q: ou want to borrow $27,000 from your local bank to buy a new car. you can afford to make monthly…

A: The given problem can be solved using RATE function in excel. RATE function computes interest rate…

Q: Suppose that you borrow $10,000 for four years at 8% toward the purchase of a car. Find the monthly…

A: The amortization schedule shows the periodic loan payment owed for each period, the amount of…

Q: A customer of your bank comes for a car loan 10000 OMR. He is charged with an interest rate of 5%…

A: Given Information : Amount of loan : 10,000 OMR Interest rate : 5% annual Tenure : 12 months

Q: Suppose that you and your friend both need to borrow the same amount of money. You borrow money…

A: In compounding there is interest on interest also including the principal amount and due to which…

Q: You want to buy a car, and a local bank will lend you $25,000. The loan will be fully amortized over…

A: Compound = n = Monthly = 12Present Value = pv = $25,000Time = t = 5 * 12 = 60Interest Rate = r = 9 /…

Q: You are buying your first car for $20,000 and are paying $2,000 as a down payment. You have…

A: Given information: Purchase amount = $20,000 Down payment = $2,000 Loan Amount = $20,000 - $2,000 =…

Q: Suppose that you decide to borrow $14,000 for a new car. You can select one of the following loans,…

A: For people, companies, and organizations all need money so they can use the loan option as loans are…

Q: You are buying your first car for $20,000 and are paying $2,000 as a down payment. You have…

A: For determination of equal monthly payment(PMT), we need to use loan amortisation formula below. PMT…

Q: You are buying a $10,000 second hand car with a down-payment of $3,000 and you finance the remaining…

A: Solution:- When a loan is taken, generally equal periodic installments are paid inclusive of…

Q: The remaining balance of your car loan would be

A: Remaining balance is the unpaid portion on the loan. It is the amount of money not yet paid to the…

Q: You want to buy a new car. You can afford payments of $425 per month and can borrow the money at an…

A: The objective of this question is to find out the total amount that can be borrowed given the…

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.