PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337117005
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Question
Chapter 7, Problem 8FPE
a)
Summary Introduction
To determine: The amount of monthly payments.
b)
Summary Introduction
To determine: The amount of interest paid by person L over the life of the loan.
c)
Summary Introduction
To determine: The APR (annual percentage rate) of the loan.
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Calculating payments, interest, and APR on auto loan
After careful comparison shopping, Isabella Green decides to buy a new Toyota Camry. With some options added, the car has a price of $20,500 - including plates and taxes. Because she can't afford to pay cash for the car, she will use some savings and her old car as a trade-in to put down $5,000. She plans to finance the rest with a $15,500, 48-month loan at a simple interest rate of 12 percent.
What will her monthly payments be? Round the answer to the nearest cent.$ per month
How much total interest will Isabella pay in the first year of the loan? Round the answer to the nearest cent.$
How much interest will Isabella pay over the full (48-month) life of the loan? Round the answer to the nearest cent.$
What is the APR on this loan? Round the answer to 1 decimal place. %
After careful comparison shopping, Noah Griffin decides to buy a new Toyota Camry. With some options added, the car has a price of $23,610 - including plates and taxes. Because he can't afford to pay cash for the car, he will use some savings and his old car as a trade-in to put down $7,610. Noah plans to finance the rest with a $16,000, 60-month loan at a simple interest rate of 5 percent.
What will his monthly payments be? Round the answer to the nearest cent.
$ per month
How much total interest will Noah pay in the first year of the loan? Round the answer to the nearest cent. (Use a monthly payment analysis procedure similar to the one in Exhibit 7.7.)
$
How much interest will Noah pay over the full (60-month) life of the loan? Round the answer to the nearest cent.
$
What is the APR on this loan? Round the answer to 2 decimal places.
%
Terri is looking to purchase a used car for $15,000 and received the following auto loan offers. Her goal is to find the option with the lowest monthly payment. Which option should Terri choose to meet her goal? Note you may need to use a financial calculator to answer this question. Select answer from the options below There is not enough information to answer this question. A 60-month loan with a fixed 3.65% interest rate. A 48-month loan with a fixed 2.76% interest rate. A 36-month loan with a fixed 2.72% interest rate.
Chapter 7 Solutions
PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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