Pretend that you are saving up for a down payment on a car or house.Pretend that we get an inheritance of $4,000 so we put the inheritancein a special bank account that pays 4.00% APR compoundedquarterly for four-years. We also decide to save $400 a quarter intothis savings account to help grow our down payment.a. How much money do we have in our savings account at the endof all these years?b. How much interest do we earn in total? 2. Pretend that you take out a six-year, $35000 car loan at 6% APRcompounded monthly.Let's also pretend that you don't like debt so you decide to pay anextra $60 every month to the loan.Last monthly payment clarification when paying extra money to a loan:modify your very last monthly payment so that the loan is paid off (nearzero $). All of your monthly payments will be the exact same with oneexception: your very last payment will be something less than normal toend the loan. This is what happens in the real world btw when youregularly pay extra money towards a loan.a. When will the loan be paid off?b. How much money do you save overall by paying a little extra($60) every month to the loan? (use the Payment column to getyour answer.)

Future value of a present amount Future value is always more than the present amount, deposited in…

Answered: Pretend that you are saving up for a…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 2P: Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for...

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Pretend that you are saving up for a down payment on a car or house. Pretend that we get an inheritance of $4,000 so we put the inheritance in a special bank account that pays 4.00% APR compounded quarterly for four-years. We also decide to save $400 a quarter into this savings account to help grow our down payment. a. How much money do we have in our savings account at the end of all these years? b. How much interest do we earn in total?

2. Pretend that you take out a six-year, $35000 car loan at 6% APR
compounded monthly.
Let's also pretend that you don't like debt so you decide to pay an
extra $60 every month to the loan.
Last monthly payment clarification when paying extra money to a loan:
modify your very last monthly payment so that the loan is paid off (near
zero $). All of your monthly payments will be the exact same with one
exception: your very last payment will be something less than normal to
end the loan. This is what happens in the real world btw when you
regularly pay extra money towards a loan.
a. When will the loan be paid off?
b. How much money do you save overall by paying a little extra
($60) every month to the loan? (use the Payment column to get
your answer.)

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