Comparing payments and APRs of financing alternatives Because of a job change, Finn McBryde has just relocated to the southeastern United States. He sold his furniture before he moved, so he's now shopping for new furnishings. At a local furniture store, he's found an assortment of couches, chairs, tables, and beds that he thinks would look great in his new, two-bedroom apartment; the total cost for everything is $6,400. Because of moving costs, Finn is a bit short of cash right now, so he's decided to take out an installment loan for $6,400 to pay for the furniture. The furniture store offers to lend him the money for 48 months at an add-on interest rate of 8.5 percent. The credit union at Finn's firm offers to lend him the money - they'll give him the loan at a simple interest rate of 13 percent, but only for a term of 24 months. Compute the monthly payments for the loan from the furniture store. Round the answer to the nearest cent. __$ per month Compute the monthly payments for the loan from the credit union. Round the answer to the nearest cent. _$ per month Determine the APR for the loan from the furniture store. Round the answer to 2 decimal places. _ % Determine the APR for the loan from the credit union. Round the answer to 2 decimal places. % Which is more important: low payments or a low APR? _________________________

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 10FPE

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Comparing payments and APRs of financing alternatives

Because of a job change, Finn McBryde has just relocated to the southeastern United States. He sold his furniture before he moved, so he's now shopping for new furnishings. At a local furniture store, he's found an assortment of couches, chairs, tables, and beds that he thinks would look great in his new, two-bedroom apartment; the total cost for everything is $6,400. Because of moving costs, Finn is a bit short of cash right now, so he's decided to take out an installment loan for $6,400 to pay for the furniture. The furniture store offers to lend him the money for 48 months at an add-on interest rate of 8.5 percent. The credit union at Finn's firm offers to lend him the money - they'll give him the loan at a simple interest rate of 13 percent, but only for a term of 24 months.

Compute the monthly payments for the loan from the furniture store. Round the answer to the nearest cent.
________$ per month

Compute the monthly payments for the loan from the credit union. Round the answer to the nearest cent.
___________$ per month

Determine the APR for the loan from the furniture store. Round the answer to 2 decimal places.
___________ %

Determine the APR for the loan from the credit union. Round the answer to 2 decimal places.
____________%

Which is more important: low payments or a low APR?
_______________________________

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