Ellen is shopping for a truck and has up to $325 to spend biweekly at a dealership in Selkirk, MB where the PST + GST is 12%. She wants to pay the truck off in 5 years. She has a down payment of $1400. The dealership will finance the truck at an interest rate of 4.95%. a. How expensive a truck can Ellen afford to buy? b. How much interest will Ellen pay over the course of the loan?

Ellen is shopping for a truck and has up to $325 to spend biweekly at a dealership in Selkirk, MB where the PST + GST is 12%. She wants to pay the truck off in 5 years. She has a down payment of $1400. The dealership will finance the truck at an interest rate of 4.95%. a. How expensive a truck can Ellen afford to buy? b. How much interest will Ellen pay over the course of the loan?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

See similar textbooks

Similar questions

Maria and John decide to shop for furnishings for the new house. They choose items that amount to $5600.00. The store has 2 fixed installment simple interest loan options for purchasing: They decide to defer any purchases and invest a $5600 bonus that Maria will be getting from work in a savings account. The interest rate is 1.8% compounded every month. How much interest will they earn in 4 years? Show work
Zoë is buying a new car. Because of her excellent credit, Zoë is getting her financing at 3.25% APR. The car costs $25,795 (everything included), and Zoë is financing the car for 60 months. If Zoë wants her monthly payment to be $300, how much must she put down on the car at delivery?
Andie needs to borrow $6,000 to buy a car. One dealer offers her a monthly payment of $193.60 on a 3-year loan with an APR of 10 percent while another dealer offers her a monthly payment of $158.00 on a 4-year loan with an APR of 12 percent. If she can afford to make either payment, which loan costs less overall?
Mary would like to save $10,000 at the end of 5 years for a future down payment on a car. a. How much should she deposit at the end of each month in a savings account that pays 1.2%/a, compounded monthly, to meet her goal? b. If you currently have a part-time job, consider your hourly wage. If you do not have a job, use the minimum hourly wage in your jurisdiction. How many hours each month would you have to work, just to make those payments? Write a brief reflection on the advantages and disadvantages to long-term saving for a purchase, compared to borrowing a large sum of money and paying it off over time. Note that interest rates for savings accounts are always lower than interest rates for borrowing.
A student has a job that leaves her with $300 per month in disposable income. She decides that she will use the money to buy a car. Before looking for a car, she arranges a 100% loan whose terms are $300 per month for 48 months at 9% nominal annual interest. What is the maximum car purchase price that she can afford with her loan?
Tayah is considering buying a new car for which she will need to borrow $23,900. But first, as she learned in FI 3300, Tayah wants to know how much she will have to pay per month on the dealership loan. The loan that Tayah is being offered has a five-year term, requires monthly payments, and has an interest rate of 4.4% p.a. What is the required monthly payment on this loan, assuming that the first payment will be made exactly one month from today? $439.22 $438.69 $444.48 $451.87 $442.74
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.
Sylvia wants to buy a car and feels that she can afford payments of $200 per month (month-end payments) for five years. Using an interest rate of j12-4.8%, what is the most expensive car that she can buy? Your Answer:
Maria and John decide to shop for furnishings for the new house. They choose items that amount to $5600.00. The store has 2 fixed installment simple interest loan options for purchasing: 20% down payment and financing at 5% simple interest per year for 3 years. What will be the finance charge or interest be?
Kat is looking to but her first car. She has figured that she can afford to make up to a $388 monthly payment to the bank for a car loan. She plans to pay off the car loan in 5 years and the bank is willing to give her a 6% interest rate, compounded monthly. What is the maximum amount she can borrow to purchase a car? (How expensive of a car can she afford) Round to the dollar $
My daughter wants to buy a new car. Here are the parameters. The car cost $12,000 with terms of 5% APR over five years. She has $3000 saved up and is ready to put down on the loan. 1. What is the actual annual percentage rate she will be charged if she pays all of the $3000 as a down payment for the five years? What will her monthly payments be? 2. Would it be better (cheaper) for her to pay $1000 down now, borrowing the rest, but in 1 year pay the other $2000 put towards principal? How will this affect the loan?
A car dealer carries out the following calculations. What is the annual percentage rate? List price $5,306.00 Options $1625.00 Destination charges $200.00 Subtotal $7.131.00 Tax $431.58 Less trade-in $2932.00 Amount to be financed $4,696.83 5% interest for 36 months $1501.63 Total $6,198.46 MONTHLY PAYMENT $172.00