A student wants to save up for a car, assuming that he/she would be able to save up a certain sum every month or every three months. The car value in 4 years is expected to be 255000 LE, if the bank pays 0.14 interest compounded monthly? How much must the student put aside every month?____________ What will be the equivalent interest rate if the student saves every three months?_____________ How much must the student put aside every three months? _______________

Q: You need to have 59,173 dollars to buy a new car 5 years from now. How much do you need to save at…

A: An annuity is the sum total of all the periodic payments or investments made over the period of time…

Q: Jimmy wants to buy a taxi 6 years later. He will need $550,000 as the down payment. He initially…

A: Part (a): Answer: Annual effective rate of interest is 6.14%

Q: Suppose you have selected a new car to purchase for $19,500. If the car can be financed over a…

A: Interest Payment: It refers to the financial or monetary charge levied on the borrowed amount.

Q: Suppose you finance a $10000 car over 8 years at car an interest rate of 14% per month. How much is…

A: Loan amount (PV) = $ 10000 Period = 8 Years Number of monthly payments (n) = 8*12 = 96 Interest rate…

Q: Suppose you want to borrow $20,000 for a new car. You can borrow at 8% per year, compounded monthly…

A: Amount to borrow= $20,000 Interest rate= 8% per year, compounded monthly (0.6667% per month) Time…

Q: You want to buy a $260,000 home. You plan to pay $26000 as a down payment, and take out a 30 year…

A: When a person does not have enough money to buy any assets, he would consider taking a loan. The…

Q: How much will you need to save per month to have $200,000 after 12 years, if your account earns 5%…

A: The formula used as follows: Future value of annuity=Payment×1+rn-1r

Q: Suppose you would like to save enough money to pay cash for your next car. The goal to save an extra…

A: Computation of quarterly deposit:Hence, the quarterly deposit is $921.76.

Q: You want to buy a car, and a local bank will lend you $20,000. The loan would be fully amortized…

A: Given Information in the Question:- Loan Amount is $20,000 Loan Period is 5 Years or 60 months…

Q: anny is saving towards his vacation. He has determined that the total cost including airfare and…

A: Given:   Cost of vacation 5000 Monthly savings  400 Time of deposit Month-end Annual…

Q: You would like to save for a car. You would like to have $20,000 saved in 4 years. You decide to…

A: Future value required (FV) = $ 20,000 Annual interest rate = 6% Monthly interest rate (r) = 6%/12 =…

Q: You are deciding to buy a car to commute to work given the comparatively low interest of 6% per…

A: A loan is a debt arrangement that provides financial assistance to a person to full fill a specific…

Q: what is the largest down payment you can make at the end of three years (immediately after the last…

A: Value at the end of saving period comprises of monthly saving and interest on those savings.…

Q: A student plan to deposit $2,000 in the bank now and another $4,000 for the next 3 years. If he…

A: Effective interest rate is 8% Amount deposited now is $2,000 Amount deposited for next three years…

Q: How much will you have after 5 years? How much will you have after 5 years if you make the deposits…

A: Each year Deposit RM 2500 Interest Rate 4%

Q: Joel is considering putting a $2200 laptop purchase on his credit card, which has an interest rate…

A: Monthly payment includes interest payment and portion of principal payment to be paid back. Interest…

Q: How much will he have to repay?

A: Simple interest means interest on principle amount. Principle = $3000 Interest rate = 5.5% Period =…

Q: Toni Torres wants to save $1,200 in the next two years to use as a down payment on a new car. If her…

A: An annuity series in which an investor saves the amount at the end of each period for a specified…

Q: You can borrow 5,000 pesos from a friend or from a bank. Your bank will charge you 20% each year,…

A: Here, Borrowed Amount is 5,ooo pesos Interest Rate charged by Bank is 20% Interest Rate charged by…

Q: A man plans to take a vacation in 5 years. He wants to buy a certificate of deposit for $1300 that…

A: To calculate the simple interest rate we will use the below formula   Interest rate = [(A-P)/P]/T…

Q: You would Ilike to have $59,000 in 5 years for the down payment on a new house following graduation…

A: Note: No intermediate rounding is done, only the answer is rounded off to nearest whole number.a)…

Q: You need $30000 in cash to buy a car 15 years from today. You expect to earn 14 percent, compounded…

A: Future value is important to both investors and financial planners because it helps them to predict…

Q: You want to borrow $73,000 from your local bank to buy a new sailboat. You can afford to make…

A: Given information: Present value is $73,000 Monthly payment of $1,450 Number of periods is 60

Q: You are planning to buy a new car/truck (of your dreams) 7 years’ time at a cost of $134,956. How…

A: Here, The monthly rate of interest is 'r' Number of months is 'n'

Q: You want to borrow $75,000 from your local bank to buy a new sailboat. You can afford to make…

A: The given problem can be solved using RATE function in excel. RATE function provides interest rate…

Q: Someone wants to save a sum of money. They are planning to save for a 5 year period with a deposit…

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: You would like to save for a car. You would like to have $20,000 saved in 5 years. You decide to…

A: Recurring deposit is an annuity where same amount is deposited with an institution over cardinal…

Q: You would like to save $250,000 for retirement. If you are planning to retire 30 years from now, how…

A: Future value of the retirement account should be (FV) = $250000 Number of periods of month payments…

Q: You want to buy a new car. You can afford payments of $500 per month and can borrow the money at an…

A: An Annuity is a continuous flow of systematic timely cash flows made or received for a stipulated…

Q: It is likely that plane tickets will increase 6.5% in each of the next three years. The cost of the…

A: The present value of the future money required considering the interest rate and period of the money…

Q: You want to buy a car, and a local bank will lend you $20,000. The loan will be fully amortized over…

A: Loan is one of the alternative of financing. An individual or organization who is taking the loan…

Q: You want to have $35,000 in cash to buy a car 3 years from today. You expect to earn 3.6 percent,…

A: In this we have to calculate present value of future value.

Q: You would like to have $550,000 when you retire in 40 years. How much should you invest each quarter…

A: Required Amount at retirement is $550,000 Time period is 40 years Interest rate is 6.4% Compounded…

Q: You would like to have $1,000,000 when you retire in 40 years. How much should you invest each…

A: Given:

Q: You would like to have $650,000 when you retire in 40 years. How much should you invest each quarter…

A: a. GIVEN, future value (FVA) = $650,000 n = 40 m =4 rate of interest (r) = 3.6% applying the formula…

Q: When you were born, your parents started to deposit monthly $2,000 in the bank. The bank offers a…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: You want to buy a car, and a local bank will lend you $20,000. The loan would be fully amortized…

A: A loan is a method through which an individual can borrow money from a financial institution for…

Q: You want to buy a car, and a local bank will lend you$40,000. The loan will be fully amortized over…

A: The real interest that an investor earns on the investment and a borrower pays on loan after…

Q: How much will you need to save per month to have $200,000 after 12 years, if you account earns 5%…

A: Compound interest = P"(1+r%/n)^tn Since the final amount is given , we need to calculate the…

Q: You want to buy a new sports car 3 years from now, and you plan to save $6,700 per year, beginning…

A: A study that proves that the future worth of the money is lower than its current value due to…

Q: Hudson would like to purchase a new car for $12,000. How much will his monthly payments be if he…

A: Loan amount (PV) = $ 12000 Interest rate = 6.5% Monthly interest rate (r) = 6.5%/12 =…

Q: You want to buy a new car. You can afford payments of $200 per month and can borrow the money at an…

A: An Annuity is a continuous flow of systematic timely cash flows made or received for a stipulated…

Q: you want to buy a car, and a local bank will lend you $20,000. The loan will be fully amortized over…

A: Given:

Q: If you save $25 per week by bringing your lunch to school for 4 years, 12 months per year, and you…

A: There are two types of annuity that we could calculate: Ordinary annuity and Annuity due. The…

Q: A high school student would like to save P50,000 for his graduation. How much should he deposit in a…

A: The amount required in the future is the future value of periodic deposits. This is the compounded…

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.