Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 19P
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Question
You currently have two loans outstanding: a car loan and a student loan. The car loan requires that you pay $308 per month, starting next month for 35 more months. Your student loan requires that you pay $132 per month, starting next month for the next 105 months.
A debt consolidation company gives you the following offer: It will pay off the balances of your two loans today and then charge you $455 per month for the next 48 months, starting next month. If your investments earn 3.55% APR, compounded monthly, how much would you save or lose by taking the debt consolidation company’s offer?
If you lose, state your answer with a negative sign (e.g., -25,126)
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