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- Samuel Ames owes 20,000 to a friend. He wants to know how much he would have to pay if he paid the debt in 3 annual installments at the end of each year, which would include interest at 14%. Draw a time line for the problem. Indicate what table to use. Look up the table value and place it in a brief formula. Solve.Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the yearCalculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five years at 7 percent. Payments, which are made on a monthly basis, are determined using the add-on method. a. How much total interest will Eli pay on the loan if it is held for the full five-year term? b. What are Elis monthly payments? c. How much higher are the monthly payments under the add-on method than under the simple interest method?
- Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?Tim Huston purchased a wall unit for $2,200. He made a $600.00 down payment and financed the balance with an installment loan for 48 months. If Tim’s payments are $42.59 per month, use the APR formula to calculate what annual percentage rate he is paying on the loan. (Round your answer to two decimal places)While buying a new car, Alexander made a down payment of $1,100 and agreed to make month-end payments of $290 for the next 5 years and 7 months. She was charged an interest rate of 4% compounded semi-annually for the entire term.a. What was the purchase price of the car?Round to the nearest centb. What was the total amount of interest paid over the term?
- Kimberly Jensen of Storm Lake, Iowa, wants to buy some living room furniture for her new apartment. A local store offered credit at an APR of 16 percent, with a maximum term of four years. The furniture she wishes to purchase costs $3,600, with no down payment required. Using Table 7-2 or the Garman/Forgue companion website, make the following calculations (round all intermediate calculations to two decimal places): What is the amount of the monthly payment if she borrowed for four years? Round your answer to the nearest cent.Hazel has taken out a 40,000 loan that requires quarterly payments of $2300 over over five years. What is the APR for this loan how do I answer this using the TVM functionTo start a new business, Alysha intends to borrow $25.000 from a local bank. If the bank asks her to repay the loan in 5 equal annual instalments of $6,935.24, determine the bank's effective annual interest rate on the ipan transaction. With annual compounding, what nominal rate would the bank quote for this loan?
- Jenna bought a new car for $28,000. She paid a 20% down payment and financed the remaining balance for 36 months with an APR of 3.5%. Assuming she makes monthly payments, determine the total interest Jenna pays over the life of the loan. Round your answer to the nearest cent, if necessary.To help open up a jewelry store, Kaitlin borrowed money from her credit union.She took out a personal, amortized loan for $44,500 , at an interest rate of 6.9% , with monthly payments for a term of 6 years.For each part, do not round any intermediate computations and round your final answers to the nearest cent.If necessary, refer to the list of financial formulas . (a) Find Kaitlin's monthly payment. $ (b) If Kaitlin pays the monthly payment each month for the full term, find her total amount to repay the loan. $ (c) If Kaitlin pays the monthly payment each month for the full term, find the total amount of interest she will pay.Your uncle lends you $2,000 less $100 (interest at 5 percent), and you receive $1,900. Use the APR formula to find the true annual percentage rate. Assume you repay the entire loan in one year. What is the Annual Percentage Rate?
