Question

- You plan to purchase a car that has a cost of $42,100. You make a down payment of $4,000 and finance the rest over a period of 5 years. Your quoted annual rate is 7.30% compounded monthly. What will your monthly car payment be? Round to the nearest $0.01.

- How much must you donate today if you wish to establish a scholarship of $10,000 per year, forever Assume the proceeds can remain invested at an annual interest rate of 3.50%

Answer 1

Answer-

Total cost of car = $ 42100
Down payment = $ 4000
remaining amount = $ 42100 - $ 4000 = PV = $ 38100

Interest rate = I/Y = 7.3 % = 7.3 % / 12 = 0.6083 % / month
Furture value = FV = $ 0
Number of periods = N = 5 x12 = 60

Monthly payments = PMT = ?

Substituting all vaues in financial calculatoer we get

Monthly payments = PMT = $ 759.82

Therefore monthly car payment = $ 759.82

Answer-

Scholarship per year forever = $ 10000
Annual rate of interest = 3.5 % = 0.035

The amount to be donated today = $ 10000 / 0.035

The amount to be donated today = $ 285714.28