Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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You are interested in arranging financing to purchase a
new car from Bloomington Cars, Inc. The car that you
want has a sticker price of $42,000, an instant rebate of
$3,500, a fair market value of $39,000, and a great sound
system. The salesperson, while smoothing over his
comb-over, taps his pinky ring on the hood of the car
and tells you, "You picked the best car we have. I can also
kick in a free Bloomington Cars coffee mug." Since you
love the car, you hop up and down and say, "Sold! I'll
take it." You sign a loan contract for 60 monthly
payments based on a rate of 7.3% per year and drive
home with your new car and coffee mug, listening to that
great sound system. (Your market rate of return for the
risks you pose for a car loan is 5.5%.)
Based on Questions #1 and #3 , how much are you
overpaying each month (rounded to two places)?
Group of answer choices
$22.86
$17.46
$ 8.24
$32.87
None of the above
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Transcribed Image Text:You are interested in arranging financing to purchase a new car from Bloomington Cars, Inc. The car that you want has a sticker price of $42,000, an instant rebate of $3,500, a fair market value of $39,000, and a great sound system. The salesperson, while smoothing over his comb-over, taps his pinky ring on the hood of the car and tells you, "You picked the best car we have. I can also kick in a free Bloomington Cars coffee mug." Since you love the car, you hop up and down and say, "Sold! I'll take it." You sign a loan contract for 60 monthly payments based on a rate of 7.3% per year and drive home with your new car and coffee mug, listening to that great sound system. (Your market rate of return for the risks you pose for a car loan is 5.5%.) Based on Questions #1 and #3 , how much are you overpaying each month (rounded to two places)? Group of answer choices $22.86 $17.46 $ 8.24 $32.87 None of the above
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