Personal Finance (MindTap Course List)
13th Edition
ISBN: 9781337099752
Author: E. Thomas Garman, Raymond Forgue
Publisher: Cengage Learning
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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.)
Simple Simon's Bakery purchases supplies on terms of
1.5/10, net 30.
If Simple Simon's chooses to take the discount offered, it must obtain a bank loan to meet its short-term financing needs. A local bank has quoted Simple Simon's owner an interest rate of
10.9%
on borrowed funds. Should Simple Simon's enter the loan agreement with the bank and begin taking the discount? (Hint: Use 365 days for a year.)
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.
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- You currently have two loans outstanding: a car loan and a student loan. The car loan requires that you pay $308 per month, starting next month for 35 more months. Your student loan requires that you pay $132 per month, starting next month for the next 105 months. A debt consolidation company gives you the following offer: It will pay off the balances of your two loans today and then charge you $455 per month for the next 48 months, starting next month. If your investments earn 3.55% APR, compounded monthly, how much would you save or lose by taking the debt consolidation company’s offer? If you lose, state your answer with a negative sign (e.g., -25,126)arrow_forwardJane Zahrley’s request for a five-year automobile loan for $39,000 has been approved. Reston Bank will require equal monthly installment payments for 60 months. The bank tells Jane that she must pay a total of $5,500 in finance charges. What is the loan’s APR?arrow_forwardThe Second National Bank of Fullerton advertises an APR of 15%, but it indicates in the “small print” that compounding occurs on a monthly basis for personal loans with no collateral required. This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. Determine the APY you would pay using an equation. The APY paid would be % per year.arrow_forward
- Pat Radigan is planning to buy a Toyota hybrid for $18,989 with $2,100 down and plans to finance the car. Citizens’ Financial Bank quoted a finance charge at 8% for 48 months; Charter One Bank quoted him a finance charge at 7.5% for 60 months. a. What would be his monthly payment to Citizens’ Financial Bank? (Do not round intermediate calculations. Round your answer to the nearest cent.)arrow_forwardKimberly 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.arrow_forwardIn August 2008, a car manufacturing company was offering the choice of a 3.3% loan for 72 months, or $3000 cash back on the purchase of a $25,377 car. (a) If someone took the 3.3% loan offer, how much will the monthly payment be? (b) If someone took the $3000 cash-back offer and can borrow money from their local credit union at 7.6% interest compounded monthly for six years, how much will the monthly payment be? (c) Which of the two offers is more favorable?arrow_forward
- A small business owner visits her bank to ask for a loan. The owner states that she can repay a loan at $2,000 per month for the next 2 years and then $1,000 per month for 2 years after that. If the bank charges a 9% annual percentage rate (APR) it would be willing to lend to the business owner . A) $60,480 B) $63,598 C) $65,143 D) $62,074arrow_forwardJane Doe Enterprises is offering 6% APR on 6 year loans. You want to borrow money, but you can't afford more than $742 per month. What's the most can you borrow today so that you don't owe more than $742 per month?arrow_forwardScarlett borrowed $ 1,900 from a local payday lender and signed a debt contract requiring her to pay back $2,600 in three months. What is the quarterly rate? And what is the effective annual rate (EAR) of this loan? 2. You are hoping to start up a new business but require start-up capital. You are looking for a cheap loan to help start the business. You see a sign offering loans with a daily interest rate of 0.062%. What are the EAR and APR?arrow_forward
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