Larry wants to make a decision on a six- year amortized loan for him to buy a new car. The value of the car is $33 560. The annual interest rate of the loan is 14.06% compounded monthly. He can afford to pay up to $700 monthly in order to repay the loan. Determine if it is enough for him to

Larry wants to make a decision on a six- year amortized loan for him to buy a new car. The value of the car is $33 560. The annual interest rate of the loan is 14.06% compounded monthly. He can afford to pay up to $700 monthly in order to repay the loan. Determine if it is enough for him to

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 23PROB

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Concept explainers

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.

Question

5 Larry wants to make a decision on a six-
vear amortized loạn for him to buy a new
car. The value of the car is $33 560. The
annual interest rate of the loan is 14.06%
compounded monthly. He can afford to pay
the
up to $700 monthly in order to repay
loan. Determine if it is enough for him to
agree on this contract.

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