Problem 6-20 Calculating Loan Payments [LO2, 4] You want to buy a new sports coupe for $73,500, and the finance office at the dealership has quoted you an APR of 5.5 percent for a 72-month loan to buy the car. a. What will your monthly payments be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the effective annual rate on this loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,

Problem 6-20 Calculating Loan Payments [LO2, 4] You want to buy a new sports coupe for $73,500, and the finance office at the dealership has quoted you an APR of 5.5 percent for a 72-month loan to buy the car. a. What will your monthly payments be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the effective annual rate on this loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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(Page 8.8.9) Your credit card has a balance of $5200 and an annual interest rate of 16%.You decide to pay off the balance over three years. If there are no further purchases charged to the card, you must pay $182.85 each month, and you will pay a total interest of $1382.60. Assume you decide to pay off the balance over one year rather than three. How much more must you pay each month and how much less will you pay in total interest? Use PMT=P(R/N)/1-(1+R/N)^-NT to determine the regular payment amount. You will pay $_______ more each month. (Round to the nearest cent as needed.)
Problem 6-15 Calculating APR [LO4] Elliott Credit Corp. wants to earn an effective annual return on its consumer loans of 15.2 percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers? (Use 365 days a year. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Q 19 A local furniture store is advertising a deal in which you buy a $2,200 dining room set and do not need to pay for two years (no interest cost is incurred).How much money would you have to deposit now in a savings account earning 5 percent APR, compounded monthly, to pay the $2,200 bill in two years? (Do not round intermediate calculations and round your final answer to 2 decimal places.) PRESENT VALUE? How much would you have to deposit in the savings account each month earning 5 percent APR to be able to pay the bill? (Do not round intermediate calculations and round your final answer to 2 decimal places.) ANNUITY PAYMENT?
q 13 A local furniture store is advertising a deal in which you buy a $6,000 living room set with three years before you need to make any payments (no interest cost is incurred).How much money would you have to deposit now in a savings account earning 6 percent APR, compounded monthly, to pay the $6,000 bill in three years? (Do not round intermediate calculations and round your final answer to 2 decimal places.)PRESENT VALUE? How much would you have to deposit in the savings account each month 6 percent APR to be able to pay the bill? (Do not round intermediate calculations and round your final answer to 2 decimal places.)ANNUITY PAYMENT?
Problem 5-22 Perpetuities (LO3) A local bank advertises the following deal: "Pay us $100 at the end of each year for 10 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever." a. Calculate the present value of your payments to the bank if the interest rate is 8.25%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the present value of a $100 perpetuity deferred for 10 years if the interest rate is 8.25%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Problem 5-30 Calculating Annuities Due [LO 2] You want to buy a new sports car from Muscle Motors for $44,200. The contract is in the form of a 60-month annuity due at an APR of 5.95 percent. What will your monthly payment be?
LO 12.4 Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank in the amount of $500,000. The terms of the loan are 2.9% annual interest rate and payable in 8 months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on October 20, and the entry for payment of the short-term note and final interest payment on May Round to the nearest cent if required.
Q 15 You are looking to buy a car. You can afford $720 in monthly payments for five years. In addition to the loan, you can make a $820 down payment. If interest rates are 9.75 percent APR, what price of car can you afford (loan plus down payment)? (Do not round intermediate calculations and round your final answer to 2 decimal places.) PRESENT VALUE?
5.5 You have $1,154.95 in a brokerage account, and you plan to deposit an additional $6,000 at the end of every future year until your account totals $200,000. You expect to earn 12% annually on the account. How many years will it take to reach your goal? Round your answer to the nearest whole number.
Pm.6 You want to buy a new sports car from Muscle Motors for $55,000. The contract is in the form of an annuity due for 48 months at an APR of 7.00 percent. What will your monthly payment be? Multiple Choice $1,335.59 $1,283.22 $1,309.41 $1,317.04 $1,243.93
Q 25 Say that you purchase a house for $174,000 by getting a mortgage for $155,000 and paying a down payment of $19,000. If you get a 15-year mortgage with an interest rate of 6 percent, what are the monthly payments? (Do not round intermediate calculations and round your final answer to 2 decimal places.)PAYMENT? What would the loan balance be in five years? (Use a payment value rounded to 2 decimal places. Round your final answer to 2 decimal places.)LOAN BALANCE? If the house appreciates at 3 percent per year, what will be the value of the house in five years? (Round your final answer to 2 decimal places.)FUTURE BALANCE? How much of this value is your equity? (Use intermediate values rounded to 2 decimal places. Round your final answer to 2 decimal places.)EQUITY?
(Related to Checkpoint 5.6) (Solving for i) You lend a friend $10,000, for which your friend will repay you $27,027 at the end of 5 years. What interest rate are you charging your "friend"? The interest rate you are charging your friend on the loan is nothing%. (Round to the nearest whole percent.)

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