You need a new car and the dealer has offered you a price of $20,000, with the following payment options: (a)pay cash and receive a $2,000 rebate, or (b) pay a $5,000 down payment and finance the rest with a 0% APRloan over 30 months. But having just quit your job and started an MBA program, you are in debt and you expectto be in debt for at least the next 2 % years. You plan to use credit cards to pay your expenses; luckily you haveone with a low (fixed) rate of 15.47% APR. Which payment option is best for you?Your monthly discount rate is %. (Round to four decimal places.)

In this question, a person needs a car and dealer give him some offers and we have to see that which…

Answered: You need a new car and the dealer has…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

You need to take out a loan of $35,000 to start up your T-shirt business. You have two possibilities: one bank is offering a 12% loan for 8 years, and another is offering a 15% loan for 6 years. Which loan has the lower monthly payments? Show work.
You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 8% per year. You can afford to pay only $25,580 per year. The bank agrees to allow you to pay this amount each year, yet still borrow $300,000. At the end of the mortgage (in 30 years), you must make a balloon payment; that is, you must repay the remaining balance on the mortgage. How much will this balloon payment be? a) The PV of the annuity is $. b) The balloon payment is $. (Round to the nearest dollar.) (Round to the nearest dollar.)
You have an outstanding student loan with required payments of $600 per month for the next four years. The interest rate on the loan is 8% APR (monthly). You are considering making an extra payment of $200 today (that is, you will pay an extra $200 that you are not required to pay). If you are required to continue to make payments of $600 per month until the loan is paid off, what is the amount of your final payment? What effective rate of return (expressed as an APR with monthly compounding) have you earned on the $200? If you are required to continue to make payments of $600 per month until the loan is paid off, what is the amount of your final payment? The amount of your final payment is $ (Round to the nearest cent.)
You want to by a boat and can afford payments of $350 per month for six years. The monthly interest rate is 0.5%. (a) What is the maximum you can spend on the boat if there is no down payment? (b) What is the maximum you can spend on the boat if you make a down payment of $6000 at the time of purchase?
You just got a new part-time job and you need to buy a new car for your job. Suppose you have enough savings to pay the downpayment and you can only afford to pay $400 a month starting one month from now. Suppose your car dealer offers you a car loan with an annual interest rate of 6 %, how much will you be able to borrow for the new car today if you finance the amount over 5 years?
Russ T. Steele (a AMU engineering major) is thinking of buying a brand new sport utility vehicle for $26,000 today and putting $4000 down through the trade of his existing vehicle. The vehicle loan is for 5 years at an APR of 18% because he currently has a terrible credit rating. If interest is compounded monthly and his payments are monthly, the total interest that Mr. Steele will have paid on the loan if he makes only the monthly payments (no more, no less!), will be approximately equal to a total of: O a. $11,500 O b. $19,500 O c. $15,500 O d. $17,500
You have an outstanding student loan with required payments of $500 per month for the next four years. The interest rate on the loan is 9% APR (monthly). You are considering making an extra payment of $100 today (that is, you will pay an extra $100 that you are not required to pay). If you are required to continue to make payments of $500 per month until the loan is paid off, what is the amount of your final payment? What effective rate of return (expressed as an APR with monthly compounding) have you earned on the $100? If you are required to continue to make payments of $500 per month until the loan is paid off, what is the amount of your final payment? The amount of your final payment is $ 356.86. (Round to the nearest cent.) What rate of return (expressed as an APR with monthly compounding) have you earned on the $100? Effective rate is%. (Round to the nearest integer.)
Barry Wood wants to buy a used car that costs $5000. He has two possible loans in mind. One loan is through the car dealer; it is a three-year add-on interest loan at 6% and requires a down payment of $300. The second is through his credit union; it is a three-year simple interest amortized loan at 7.5% and requires a 10% down payment. (a) Find the monthly payment for each loan. (Give your answer to the nearest cent.) Dealer $ Credit Union $ (b) Find the total interest paid for each loan. (Give your answer to the nearest cent.) Dealer $ Credit Union $
You are thinking of purchasing a house. The house costs $400,000. You have $57,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 9% per year. What will be your annual payment if you sign this mortgage? The annual payment is $. (Round to the nearest dollar.)
Billy Bob would like to purchase a new truck. The salesman has given BB 2 options for financing his truck. He can finance the $30,000 loan at 0% for 60 months, or he can receive a rebate amount and finance with his bank. He will apple the $2000 rebate and finance the difference if he finances with his bank. His bank is offering a rate of 5% for a 60 month loan. a. What is BBs payment if he takes the dealers 0% offer ? (30000, 60) b. what is BBs payment if he applies the rebate to reduce the loan amount and finances with his bank? (loan amount 28000, rate& term 0.05, 60)
You are thinking of buying a house beside the College which you will rent to students. You expect to receive $2,000 a month in rental income. Your real estate agent estimates that you will be able to sell the property for $250,000 at the end of 46 months. You'd like a return of at least 0.2% per month. What is the most that you should pay for the house, assuming that you will purchase the house today and receive the first (beginning of month) rental payment today. What is the most that you should pay for the property today? (Round to the nearest dollar.)
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.

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