Engineering Economic Analysis
13th Edition
ISBN: 9780190296902
Author: Donald G. Newnan, Ted G. Eschenbach, Jerome P. Lavelle
Publisher: Oxford University Press
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Question
Chapter 7, Problem 88P
To determine
(a)
The annual percentage rate.
Expert Solution
Answer to Problem 88P
The annual percentage rate is
Explanation of Solution
Given:
The loan amount is
The time period is
The interest rate is
Concept used:
Write the expression for loan origination fee of
Here, the loan origination fee is F and the loan amount is
Write the expression for the interest paid.
Here, the interest paid is I and the interest rate is
Write the expression for the total cost of the loan.
Here, the total cost of the loan is F.
Write the expression for the Annual Percentage Rate.
Here, the annual percentage rate is APR.
Calculations:
Calculate the loan origination fee of
Substitute
Calculate the interest paid in
Substitute
Calculate the total cost of the loan.
Substitute
Calculate the Annual Percentage Rate.
Substitute
Conclusion:
Thus, the value of annual percentage rate is
To determine
(b)
The annual percentage rate.
Expert Solution
Answer to Problem 88P
The annual percentage rate is
Explanation of Solution
Given:
The loan amount is
The time period is
The interest rate is
Concept used:
Write the expression for the interest rate.
Here, the interest for each year is
Calculations:
Calculate the loan origination fee of
Substitute
Calculate the interest paid in
Substitute
Calculate the total cost of the loan.
Substitute
Calculate the interest for each year.
The interest for each year is
Calculate the annual percentage rate.
Calculate the interest percentage for each year.
Substitute
Conclusion:
Thus, the value of annual percentage rate is
To determine
(c)
The graph for the effective interest rate with time to sell the car and pay-off the loan.
Expert Solution
Explanation of Solution
The graph of effective interest rate with time to sell car and pay-off the loan is shown below.
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Chapter 7 Solutions
Engineering Economic Analysis
Ch. 7 - Prob. 1QTCCh. 7 - Prob. 2QTCCh. 7 - Prob. 3QTCCh. 7 - Prob. 4QTCCh. 7 - Prob. 5QTCCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5P
Ch. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10PCh. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Prob. 15PCh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 - Prob. 20PCh. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Prob. 23PCh. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Prob. 32PCh. 7 - Prob. 33PCh. 7 - Prob. 34PCh. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 39PCh. 7 - Prob. 40PCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - Prob. 43PCh. 7 - Prob. 44PCh. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Prob. 47PCh. 7 - Prob. 48PCh. 7 - Prob. 49PCh. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Prob. 53PCh. 7 - Prob. 54PCh. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - Prob. 57PCh. 7 - Prob. 58PCh. 7 - Prob. 59PCh. 7 - Prob. 60PCh. 7 - Prob. 61PCh. 7 - Prob. 62PCh. 7 - Prob. 63PCh. 7 - Prob. 64PCh. 7 - Prob. 65PCh. 7 - Prob. 66PCh. 7 - Prob. 67PCh. 7 - Prob. 68PCh. 7 - Prob. 69PCh. 7 - Prob. 70PCh. 7 - Prob. 71PCh. 7 - Prob. 72PCh. 7 - Prob. 73PCh. 7 - Prob. 74PCh. 7 - Prob. 75PCh. 7 - Prob. 76PCh. 7 - Prob. 77PCh. 7 - Prob. 78PCh. 7 - Prob. 79PCh. 7 - Prob. 80PCh. 7 - Prob. 81PCh. 7 - Prob. 82PCh. 7 - Prob. 83PCh. 7 - Prob. 84PCh. 7 - Prob. 85PCh. 7 - Prob. 86PCh. 7 - Prob. 87PCh. 7 - Prob. 88PCh. 7 - Prob. 89P
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