To purchase a used automobile, you borrow $10,000 from Loan Shark Enterprises. They tell you the interest rate is 1% per month for 35 months. They also charge you $200 for a credit investigation, so you leave with $9,800 in your pocket. The monthly payment they calculated for you is
If you agree to these terms and sign their contract, what is the actual APR (annual percentage rate) that you are paying? (5.6)
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Engineering Economy (17th Edition)
- Identify the number of times interest calculated in a year if the interest is compounded every three months. 2. 04 12arrow_forwardSuppose you deposit $1,000 in a bank savings account that pays interest at a rate of 8% per year. Assume that you do not withdraw the interest earned at the end of each period (year) but instead let it accumulate. (1) How much would you have at the end of year 3 with simple interest? (2) How much would you have at the end of year 3 with compound interest?arrow_forwardAnswer was not A or Darrow_forward
- A bank account pays 4.5% annual interest, compounded monthly. How much must be deposited now so that the account contains exactly $11,000 at the end of one year? $must be deposited now so that the account contains exactly $11,000 at the end of one year (Do not round until the final answer. Then round to the nearest cent as needed)arrow_forwardIn 2012 the maximum Social Security deposit by an individual was $8, 386.75. Suppose you are 31 and make a deposit of this amount into an account at the end of each year. How much would you have (to the nearest dollar) when you retire if the account pays 2% compounded annually and you retire at age 65?.arrow_forwardYou purchased a winning ticket for a $5 million lottery which pays $500,000 immediately and the rest in 9 annual installments. A finance company called and offered you $3 million for it. Would you accept the offer if the rate is 10%arrow_forward
- You borrow $800 from a family member and agree to pay it back in nine months. Because you are part of the family, you are only being charged simple interest at the rate of 0.6% per month. How much will you owe after nine months? How much is the interest?arrow_forwardYou are eligible for a 30 year fixed-rate home mortgage with an interest rate of 3.6% per year. If you can afford a monthly payment of $3, 497, what is the maximum mortgage loan you can get? (Round to the nearest dollar.)arrow_forwardCompound interest is a very powerful way to save for your retirement. Saving a little and giving it time to grow is often more effective than saving a lot over a short period of time. To illustrate this, suppose your goal is to save $1 million by the age of 61. What amount of money will be saved by socking away $6,463 per year starting at age 21 with a 6% annual interest rate. Will you achieve your goal using the long-term savings plan? What amount of money will be saved by socking away $42,964 per year starting at age 46 at the same interest rate? Will you achieve your goal using the short-term savings plan? Click the icon to view the interest and annuity table for discrete compounding when i = 6% per year. The future equivalent of the long-term savings plan is $ You The future equivalent of the short-term savings plan is $ You (Round to the nearest dollar.) achieve your goal using the long-term savings plan. (Round to the nearest dollar.) achieve your goal using the short-term…arrow_forward
- Gurpreet already had a balance of $1700 on her credit card when she used it to purchase items worth another $335. The minimum monthly payment is 3% of the outstanding balance or $30 dollars, whichever is greater, and the interest rate is 19.7%, compounded daily. If Gurpreet pays only the minimum each month, how long will it take her to pay off the balance? How much interest would she end up paying?arrow_forwardSuppose you drive a 2013 model automobile that averages 25 miles per gallon (mpg) for 15,000 miles annually. If you purchase a new automobile that averages 30 mpg, how much extra money can you afford, based on fuel savings, to invest in the new car? Your personal interest rate is 6% per year, and you keep the new automobile for five years. Gasoline costs $4.00 per gallon.arrow_forwardconsider yourself unable to pay this month's rent due to financial issues. A Money lending company offers to loan you your portion of the rent and bills ($950), but the agreement says you will pay back $1010 in 1 month. What is the annual interest rate you are being charged? What does this make the annual effective rate?arrow_forward
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