You recently graduated from Miami University and are looking to purchase a new vehicle. The car costs $21,000. The bank quotes you an interest rate of 15 percent APR for a 72-month loan with a 10 percent down payment. What will your monthly payment be?

You recently graduated from Miami University and are looking to purchase a new vehicle. The car costs $21,000. The bank quotes you an interest rate of 15 percent APR for a 72-month loan with a 10 percent down payment. What will your monthly payment be?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 15P

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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 recently graduated from Miami University and are looking to purchase a new vehicle. The
car costs $21,000. The bank quotes you an interest rate of 15 percent APR for a 72-month
loan with a 10 percent down payment. What will your monthly payment be?
$375.27
$2,835.12
$399.64
$3,150.13
$444.05

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