Question

Kerri James is considering the purchase of a car, which will cost her $24,600. She will borrow the entire purchase price and make monthly payments over the next six years. The first payment is due next month and the annual interest rate is 3.00%. She will owe $____ on the car immediately following the 18th payment.

A. 18,858.19

B. 18,531.57

C. 20,757.33

D. 19,184.00

E. 23,258.56

Answer #1

**Answer is
$18,858.19**

Cost of car = $24,600

Annual interest rate = 3.00%

Monthly interest rate = 0.25%

Time period = 6 years or 72 months

Let monthly payment be $x

$24,600 = $x/1.0025 + $x/1.0025^2 + ... + $x/1.0025^72

$24,600 = $x * (1 - (1/1.0025)^72) / 0.0025

$24,600 = $x * 65.816858

$x = $373.76

Monthly payment = $373.76

After 18th payment:

Remaining number of payments = 54

Loan outstanding = $373.76/1.0025 + $373.76/1.0025^2 + ... +
$373.76/1.0025^54

Loan outstanding = $373.76 * (1 - (1/1.0025)^54) / 0.0025

Loan outstanding = $373.76 * 50.454753

Loan outstanding = $18,858.19

She will owe $18,858.19 on the car immediately following the 18th payment.

Katie plans to purchase a new car. She decides to borrow
$25,000 from her friend at 8% per year compounded monthly for 4
years. She plans to repay the loan with 48 equal monthly payments.
How much is the monthly payment?
How much interest is in the 23rd payment?
What is the remaining balance immediately after she made her
37th payment?
Later, she became able to pay off the loan at the end of the
30th month. She has not...

Paula is considering the purchase of a new car. She has narrowed
her search to two cars that are equally appealing to her. Car
A costs $23,000, and Car B costs $23,200. The
manufacturer of Car A is offering 0% financing for 48
months with zero down, while the manufacturer of Car B is
offering a rebate of $2000 at the time of purchase plus financing
at the rate of 3%/year compounded monthly over 48 months with zero
down. If...

Paula is considering the purchase of a new car. She has narrowed
her search to two cars that are equally appealing to her. Car A
costs $23,000, and Car B costs $23,500. The manufacturer of Car A
is offering 0% financing for 48 months with zero down, while the
manufacturer of Car B is offering a rebate of $2000 at the time of
purchase plus financing at the rate of 3%/year compounded monthly
over 48 months with zero down. If...

Zoe has saved enough for the down payment on a new
car. She will borrow $29,685 to pay for the remainder of
the car. She plans to make monthly payments for the next
3 years to pay off the loan. Her bank offers her a loan
at 6% annual interest. The car dealer offers her a
slightly higher rate of 7.2%. Zoe is not sure it is
worth the hassle of going to the bank when she could simply
complete the transaction at the dealer. How...

Emily wishes to purchase a new car. The car will cost
$35,000 and her credit union will finance the car at 6% for 5
years. Calculate Emily's monthly payment on the loan.
*USE THE PV FUNCTION IN EXCEL
COST
35000
NUMBER OF PERIODS
AT
Sally has just won the million-dollar Big Slam jackpot
at a gambling casino. The casino will pay her $50,000 per year at
the end of each of the next 20 years as the payoff. If Sally...

You are considering the purchase of a car that costs $30,000. A
local bank offers to provide financing for this purchase at a rate
of 9%. You are required to make 60 monthly payments to repay this
loan. Depending on when the payments start, the monthly payment
will differ. You are asked to consider the three scenarios below
and solve for the payment amount in each scenario.
Scenario
The first payment starts at:
Monthly Payment
I
End of the first...

Amal is planning to purchase a car. The sticker price is
$35,000. Provincial sales taxes of 15% would apply. Amal has $5,000
to use as a down payment. The bank will charge her 7.75% on her car
loan, compounded monthly. She will make monthly loan payments.
Part a
How much would Amal save if she paid the car off over 4 years
instead of 5 years?
Part b
Assuming she chooses to pay the car off over 5 years, how...

You are planning to acquire a new car with a negotiated purchase
price of $50,000. You prefer to turn your cars over after 4 years.
You have two financing choices: lease or borrow & buy. You can
obtain a four-year loan at 6% annual rate (which means 0.5% monthly
rate) for the entire purchase price of the car. A four-year lease
(equal monthly lease payments start immediately) requires a down
payment of $4,000. The market value of the car is...

Sharon is considering the purchase of a car. After making the
down payment, she will finance $15,500.00. Sharon is offered three
maturities. On a four-year loan, Sharon will pay $371.17 per month.
On a five-year loan, Sharon's monthly payments will be $306.99. On
a six-year loan, they will be $264.26. Sharon rejects the four-year
loan, as it is not within her budget. How much interest will Sharon
pay over the life of the loan on the five-year loan? How much...

You
are planning to acquire a new car with a negotiated purchase price
of $50,000. You prefer to turn your cars over after 4 years. You
have two financing choices: lease or borrow & buy. You can
obtain a four-year loan at 6% annual rate (which means 0.5% monthly
rate) for the entire purchase price of the car. A four-year lease
(equal monthly lease payments start immediately) requires a down
payment of $4,000. The market value of the car is...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 2 minutes ago

asked 5 minutes ago

asked 5 minutes ago

asked 5 minutes ago

asked 5 minutes ago

asked 5 minutes ago

asked 6 minutes ago

asked 10 minutes ago

asked 10 minutes ago

asked 18 minutes ago

asked 18 minutes ago