1a. 1b. 2. You are looking to buy a new car. The purchase price of the one you want is $15,000 and requires a $3,000 down payment. If the financing rate is 6.75% APR for four years, what will your monthly payments be? Suppose there is a special promotion that allows you to get $500 back (and still finance the rest at 6.75% APR) or get a 2.9% APR for four years. Which option will you choose? You can afford $1,000 a month for a house payment. You figure taxes and insurance will be about $250 a month. Assuming mortgage rates are 7% APR for a fixed rate loan, how much can you pay for a house assuming: a) a 20 year mortgage; b) a 25 year mortgage; c) a 30 year mortgage?
1a. 1b. 2. You are looking to buy a new car. The purchase price of the one you want is $15,000 and requires a $3,000 down payment. If the financing rate is 6.75% APR for four years, what will your monthly payments be? Suppose there is a special promotion that allows you to get $500 back (and still finance the rest at 6.75% APR) or get a 2.9% APR for four years. Which option will you choose? You can afford $1,000 a month for a house payment. You figure taxes and insurance will be about $250 a month. Assuming mortgage rates are 7% APR for a fixed rate loan, how much can you pay for a house assuming: a) a 20 year mortgage; b) a 25 year mortgage; c) a 30 year mortgage?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:1a.
1b.
2.
3.
Time Value of Money
You are looking to buy a new car. The purchase price of the one you want is $15,000 and requires a
$3,000 down payment. If the financing rate is 6.75% APR for four years, what will your monthly
payments be?
Suppose there is a special promotion that allows you to get $500 back (and still finance the rest at
6.75% APR) or get a 2.9% APR for four years. Which option will you choose?
You can afford $1,000 a month for a house payment. You figure taxes and insurance will be about
$250 a month. Assuming mortgage rates are 7% APR for a fixed rate loan, how much can you pay
for a house assuming: a) a 20 year mortgage; b) a 25 year mortgage; c) a 30 year mortgage?
Your TV blows up while watching Springer. The new one you would like to have costs $500, which
you don't have right now. Rent-To-Own has the TV you want for $10.56 per week, due on Monday of
each week with the first payment to be made when you take possession. At the end of 1 year (52
payments), you own the set. What interest rate are they charging?
Transcribed Image Text:PRESENT VALUE OF AN ANNUITY
Pds 0.2416667% 0.3461538% 0.5625000% 0.5833333% 6.0000000% 8.0000000%
1
10
15
0.99655
0.99441
9.81222
9.69746
14.71393
14.59264
14.34598
19.50137
19.29117
18.865594
24.23138
23.90922
23.260900
28.90465
28.44816
27.534299
33.52186
32.90935 31.689515
38.08367
37.29413
35.729813
42.59077
41.60380 39.658369
43.48568
42.45683
40.430945
44.37843
43.30692
41.199200
45.26903
44.15408
41.963157
46.15748
44.99832 42.722841
47.04379
45.83964 43.478276
47.92797
46.67806
44.229485
48.81001
47.51359
44.976492
49.68993
48.34624
45.719321
50.56772
49.17602
46.457995
51.44340
50.00293 47.192537
240
181.94885 162.83526 131.514956
300 213.20757 186.43900 144.736332
360 240.25180
20
25
0.99759
9.86836
30
35
40
45
46
47
48
49
50
51
52
53
54
55
0.99420
9.68651
14.32254
18.82569
23.19977
27.44847
31.57539
35.58401
39.47774
40.24299
41.00380
41.76020
42.51221
43.25986
44.00318
44.74218
45.47690
46.20736
46.93358
128.98251
141.48690
205.62290 154.178682 150.30757
0.94340
7.36009
9.71225
11.46992
12.78336
13.76483
14.49825
15.04630
15.45583
15.52437
15.58903
15.65003
15.70757
15.76186
15.81308
15.86139
15.90697
15.94998
15.99054
0.92593
6.71008
8.55948
9.81815
10.67478
11.25778
11.65457
11.92461
12.10840
12.31741
13.16427
12.18914
12.21216
12.23348
12.25323
12.27151
12.28843
12.30410
12.31861
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