Personal Finance (MindTap Course List)
13th Edition
ISBN: 9781337099752
Author: E. Thomas Garman, Raymond Forgue
Publisher: Cengage Learning
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Kimberly Jensen of Storm Lake, Iowa, wants to buy some living room furniture for her new apartment. A local store offered credit at an APR of 16 percent, with a maximum term of four years. The furniture she wishes to purchase costs $3,600, with no down payment required. Using Table 7-2 or the Garman/Forgue companion website, make the following calculations (round all intermediate calculations to two decimal places):
What is the amount of the monthly payment if she borrowed for four years? Round your answer to the nearest cent.
Kimberly Jensen of Storm Lake, Iowa, wants to buy some living room furniture for her new apartment. A local store offered credit at an APR of 16 percent, with a maximum term of four years. The furniture she wishes to purchase costs $3,600, with no down payment required.
What are the total finance charges over that four-year period? Round your answer to the nearest dollar.
Kimberly Jensen of Storm Lake, Iowa, wants to buy some living room furniture for her new apartment. A local store offered credit at an APR of 16 percent, with a maximum term of four years. The furniture she wishes to purchase costs $3,600, with no down payment required.
1. What are the total finance charges over that three-year period? Round your answer to the nearest dollar.
2. How would the payment change if she could afford a down payment of $600 with four years of financing? Round your answer to the nearest cent.
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- Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?arrow_forwardDel Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the yeararrow_forwardSamuel Ames owes 20,000 to a friend. He wants to know how much he would have to pay if he paid the debt in 3 annual installments at the end of each year, which would include interest at 14%. Draw a time line for the problem. Indicate what table to use. Look up the table value and place it in a brief formula. Solve.arrow_forward
- Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five years at 7 percent. Payments, which are made on a monthly basis, are determined using the add-on method. a. How much total interest will Eli pay on the loan if it is held for the full five-year term? b. What are Elis monthly payments? c. How much higher are the monthly payments under the add-on method than under the simple interest method?arrow_forwardTo help open up a jewelry store, Kaitlin borrowed money from her credit union.She took out a personal, amortized loan for $44,500 , at an interest rate of 6.9% , with monthly payments for a term of 6 years.For each part, do not round any intermediate computations and round your final answers to the nearest cent.If necessary, refer to the list of financial formulas . (a) Find Kaitlin's monthly payment. $ (b) If Kaitlin pays the monthly payment each month for the full term, find her total amount to repay the loan. $ (c) If Kaitlin pays the monthly payment each month for the full term, find the total amount of interest she will pay.arrow_forwardThe Fly-by-Night finance company advertises a “bargain 6%plan” for financing the purchase of automobiles. To the amount of the loan being financed, 6% is added for each year money is owed. This total is then divided by the number of months over which the payments are to be made, and the result is the amount of the monthly payments. For example, a woman purchases a $10,000 automobile under this plan and makes an initial cash payment of $2,500. She wishes to pay the $7,500 balance in 24 monthly payments: What effective annual rate of interest does she actually pay?arrow_forward
- A small business owner visits her bank to ask for a loan. The owner states that she can repay a loan at $1, 100 per month for the next three years and then $2, 200 per month for two years after that. If the bank is charging customers 7.75 percent APR, how much would it be willing to lend the business owner? (Do not round intermediate calculations and round your final answer to 2 decimal places.)arrow_forwardElin purchased a used car for $9,500. She wrote a check for $2,000 as a down payment for the car and financed the $7,500 balance. The annual percentage rate (APR) is 3% compounded monthly, and the loan is to be repaid in equal monthly installments over the next three years. Which of the following is most near to Elin's monthly car payment?arrow_forwardMary Jones recently obtained an equipment loan from a local bank. Theloan is for $15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must makemonthly payments on the loan, and the loan is to be repaid in 1 year. Whatis the effective annual rate on the loan (assuming a 365-day year)?arrow_forward
- While buying a new car, Alexander made a down payment of $1,100 and agreed to make month-end payments of $290 for the next 5 years and 7 months. She was charged an interest rate of 4% compounded semi-annually for the entire term.a. What was the purchase price of the car?Round to the nearest centb. What was the total amount of interest paid over the term?arrow_forwardLeila wants to buy a Corvette for $84,300 and the dealership has quoted an APR of 7.1%, compounded monthly, for 36 months. How much in total will Leila pay over the life of the loan assuming she make all payments on time?.arrow_forwardHelen is buying a $12,375 car with a $3000 down payment, followed by 36 monthly payments of $325 each. The down payment is paid immediately, and the monthly payments are due at the end of each month. What nominal annual interest rate is Helen paying? What effective interest rate?arrow_forward
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