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When would leasing a vehicle be a better option than buying?
- Describe in at least five sentences how you will prepare to purchase your next vehicle in order to (1) get the appropriate vehicle, (2) to get the best deal, and (3) to avoid getting ripped off.
For the Questions 3-5 assume you want to finance (borrow) $12,000 for your next car and your interest rate will be 6%.
- What will be your monthly payment and the total amount paid over the life of the loan if you finance for 48 months? Provide the car payment and the TVM inputs you used to calculate the payment.
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(See next page for Questions 4 and 5)
- What will be your monthly payment and the total amount paid over the life of the loan if you finance for 60 months? Provide the car payment and the TVM inputs you used to calculate the payment.
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RATE/INTEREST |
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PERIODS/N |
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- What does this tell you about total cost when financing for longer periods?
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- Evaluating financing packages. Assume that you’ve been shopping for a new car and intend to finance part of it through an installment loan. The car you’re looking for has a sticker price of $18,000. Custom Vehicles has offered to sell it to you for $3,000 down and finance the balance with a loan that will require 48 monthly payments of $333.67. However, a competing dealership will sell you the exact same vehicle for $3,500 down, plus a 60-month loan for the balance, with monthly payments of $265.02. Which of these two financing packages is the better deal?If you are saving the same amount each month in order to buy a new sports car when the new models are released, which of the following will help you determine the savings needed? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuityWe really want a new car and want to know if we can realistically afford it but also see how much interest we would end up paying in totality.If after talking to the sales person and spending a few hours at the dealearship, you were approved for a 42,000 loan with an annual percentage rate of 21.99% for a 7 year loan. What will your monthly payment be?Display in a plot the trajectory of payments over time, and trajectory of interest. Using this plot, when will most of your monthly payments go towards the principal balance and not the interest?
- After deciding to get a new car at Ehlert Motors, your options are to purchase it with a three-year loan or to lease it for three years. The car you wish to buy costs $38,600. the dealer has a special loan financing offer: if you make a 10% down payment, you qualify for a special 0.96% APR compounded monthly (much lower than the competitive market 3.6% APR compounded monthly). If you purchase the car with the loan, you expect to be able to sell it in 3 years for $22,000. If you lease the car, it has no residual value (you must turn it in at the end of the lease). To make you indifferent between purchasing and leasing, what would the present value of all lease payments need to be? Because we weren't given lease information, I believe we just need to calculate the PV of the purchasing option.You are interested in purchasing an automobile but you require financing. The dealer has provided you with several loan options to finance the purchase. Your market rate of return for the risk that you pose various lenders is 7%. The automobile that you want to purchase has a sticker price of $35,000 and a competitive market value of $31,000. Here are your loan options: Loan 1: loan has a term of 60 months, a contractual rate of interest of 8% and requires a down payment of $1,500 for the purchase of the car. The loan allows you to claim a rebate of $1,000 on the car at purchase. Loan 2: The loan has a term of 72 months, a contractual rate of 7.5% and requires a down payment of $1,000 for the purchase of the car. The loan allows you to claim a $500 rebate. Loan 3: The loan has a term of 36 months a contractual interest rate of 0% and requires $4,000 down. No rebate is available for this option. What is the value created or value destroyed for Loan 3 (round to the nearest…Suppose you want to buy a car. You have surveyed the dealers' newspaper advertisements, and the one shown has caught your attention. You can afford to make a down payment of $2,678.95, so the net amount to be financed is $20,000.(a) What would the monthly payment be?(b) After the 25th payment, you want to pay off the remaining loan in a lumpsum amount. What is this lump sum?
- You are interested in purchasing an automobile but you require financing. The dealer has provided you with several loan options to finance the purchase. Your market rate of return for the risk that you pose various lenders is 7%; The automobile that you want to purchase has a sticker price of $35,000 and a competitive market value of $31,000. Here are your loan options Loan 1: loan has a term of 60 months, a contractual rate of interest of 8% and requires a down payment of $1500 for the purchase of the car. The loan allows you to claim a rebate of $1000 on the car at purchase. Loan 2: The loan has a term of 72 months, a contractual rate of 7.5% and requires a down payment of $1000 for the purchase of the car. The loan allows you to claim a $500 rebate Loan 3: The loan has a term of 36 months a contractual interest rate of 0% and requires $4000 down. No rebate is available for this option. If you chose loan 1, and decide to pay the loan off early (after you've made…You are interested in buying a brand new jalopy and expect the purchase price to be $19,000. The car dealership can offer financing at a 6% interest rate over 6 years. If you put 1,000 down towards the purchase and accept the financing terms, what will your monthly payment for the loan be? In Excel, I need to know all the steps in Excel for the answer. Everything thing needs to be filled in so I have all parts answered for this question. Thank You!Please do not use another example in Excel because that is not the way i am suppose to solve it all arguments in EXCEL need to be entered when using PMT in Excel I have the answer I need to show how I came up with that answer using all the arguments in one box not broken down to 2 diffrent steps. Thanks and here is the answer.298.31You are interested in buying a brand-new jalopy and expect the purchase price to be $19,000. The car dealership can offer financing at a 6% interest rate over 6 years. If you put 1,000 down towards the purchase and accept the financing terms, what will your monthly payment for the loan be? In Excel, I need to know all the steps in Excel for the answer. Everything thing needs to be filled in, so I have all parts answered for this question. Thank You! Please do not use another example in Excel because that is not the way i am supposed to solve it all arguments in EXCEL need to be entered when using PMT in Excel I have the answer I need to show how I came up with that answer using all the arguments in one box not broken down to 2 different steps. Thanks, and here is the answer.298.31 The following are the values given to calculate the monthly payment. The purchase price of the jalopy is $19,000 and down payment is $1,000. Hence, the present value of jalopy is $18,000 ($19,000 - $1,000).…
- You are interested in buying a brand-new jalopy and expect the purchase price to be $19,000. The car dealership can offer financing at a 6% interest rate over 6 years. If you put 1,000 down towards the purchase and accept the financing terms, what will your monthly payment for the loan be? In Excel, I need to know all the steps in Excel for the answer. Everything thing needs to be filled in, so I have all parts answered for this question. Thank You! Please do not use another example in Excel because that is not the way i am supposed to solve it all arguments in EXCEL need to be entered when using PMT in Excel I have the answer I need to show how I came up with that answer using all the arguments in one box not broken down to 2 different steps. Thanks, and here is the answer.298.31 The following are the values given to calculate the monthly payment. The purchase price of the jalopy is $19,000 and down payment is $1,000. Hence, the present value of jalopy is $18,000 ($19,000 - $1,000).…suppose that you decide to borrow $15,000 for a new car. you can select one of the following loans, each requiring regular monthly payments. Installment loan A: 3-year loan at 5.9% Installment loan B: 5-year loan at 6.4% a.- find the monthly payments and the total interest for loan A b.-find the monthly payments and the total interest for loan B c.- compare the two loans. which is more economical?Suppose that you decide to borrow 16000 for a new car. You can select one of the following loans each requiring regular monthly payments. Installment loan A three-year loan at 6.3% Installment loan B five -year loan at 6.4% What would be the monthly payments for each loan and total interest for them also? How much will the buyer save in interest?
