Erika is weighing her options for transportation. She's narrowed them down to the following: Option A: Buying a new car requiring a loan to finance $10,000 at 1.9% compounded monthly over 60 months Option B: Buying a 6 year old, used car, requiring a loan to finance $6,000 at 3.6%interest compounded monthly over 48 months. a : Calculate Erika's monthly payment for both options b: If you were advising Erika on her options, name at least 3 things other than the monthly payment that she shouls take into consideration in making her decision.

Erika is weighing her options for transportation. She's narrowed them down to the following: Option A: Buying a new car requiring a loan to finance $10,000 at 1.9% compounded monthly over 60 months Option B: Buying a 6 year old, used car, requiring a loan to finance $6,000 at 3.6%interest compounded monthly over 48 months. a : Calculate Erika's monthly payment for both options b: If you were advising Erika on her options, name at least 3 things other than the monthly payment that she shouls take into consideration in making her decision.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter17: Accounting For Notes And Interest

Section: Chapter Questions

Problem 1MYW

See similar textbooks

Similar questions

Yuli plans to purchase a vehicle, and she is working with two bank offers. . Bank One Loan Offer: $73,800, 6% annual interest, 60 months. . Bank Two Loan Offer: $73,800, 3% annual interest, 84 months. Yuli's ultimate financial goal is to select the loan with the lowest monthly payment regardless of duration. Based on her financial goal, which loan will Yuli choose? O A. Bank One: Loan Offer O B. Bank Two: Loan Offer OC. Both monthly payments are the same. O D. Not enough information given to answer the question.
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
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.
Sara Beth wants to purchase a used car in excellent condition. She has decided on a car with low mileage that will cost $20,000. After considering several alternatives, she identified a local lending source that will charge her an interest rate of 6% per annum compounded monthly for a 48 month loan: (a) What will be the size of her monthly payments? (b) What will be the remaining balance on her loan immediately after making her 24th payment? (c) If she chooses to pay off the loan at the time of her 36th payment, how much must she pay? (d) What portion of her 12th payment is interest? (e) What portion of her 12th payment is an equity payment?
Sarah Maddox wants to buy a new car that will cost $15,000. She will make a down payment in the amount of $3,000. She would like to borrow the remainder from a bank at an interest rate of 8% compounded monthly. She agrees to make monthly payments for a period of two years in order to pay off the loan.Select the correct answer for each of the following questions:(a) What is the amount of the monthly payment (A)?1. A = $12,000 (A/P, 0.75%, 24).2. A = $12,000 (A/F, 0.66%, 24).3. A = $12,000 (A/P, 0.66%, 24).4. A = $12,000 (A/F, 9%, 2)/12. (b) Sarah has made 12 payments and wants to figure out the remaining balance immediately after the 12th payment. What is that remaining balance?1. B12 = 12A.2. B12 = A(P/A, 9%, 1)/12.3. B12 = A(P/A, 0.66%, 12).4. B12 = 10,000-12A.
Can Olivia and Anthony Afford This Home Using the Monthly Income Loan Criterion? Next week, your friends Olivia and Anthony want to apply to the Fourth Global Bank for a mortgage loan. They are considering the purchase of a home that is expected to cost $125,000. Given your knowledge of personal finance, they’ve asked for your help in completing the Home Affordability Worksheet that follows. (Note: When completing the form, round each dollar amount to the nearest whole dollar.) To assist in the preparation of the worksheet, Olivia and Anthony also collected the following information: • Their financial records report a combined gross before-tax annual income of $125,000 and current (premortgage) installment loan, credit card, and car loan debt of $1,823 per month. • Their property taxes and homeowner’s insurance policy are expected to cost $3,125 per year. • Their best estimate of the interest rate on their mortgage is 7.5%, and they are interested in obtaining a 15-year loan.…
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: Option 1: 20% down payment and financing at 5% simple interest per year for 3 years. Option 2: no down payment and financing at 5.25% simple interest for 4 years. Answer each of the following questions separately, showing all your work to reach each answer. Which option will result in smaller finance charge (interest)? What will that finance charge/interest be? Which option will result in the smaller monthly payment on this fixed installment loan? What will that monthly payment be? 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? They decide to defer any purchases and loan the $5600 bonus to a needy relative at 5%…
Please show how to solve questions a. and b. using an excel spreadsheet, and please show the formulas for the cell inputs. Carly decides to buy a house with price of $450,000. Carly puts 20% down payment and consider a 30-year fixed rate mortgage to pay the remaining balance. The lender offers Carly two choices of the mortgage with monthly payments in the table provided. Suppose that the origination cost is $6,000. a. If Carly holds the loan for 30 years, what is the effective cost for each choice? b. How about the effective cost for each choice if the loan will only be outstanding for 5 years (60 months) (the borrower will pay off the loan at the end of 60 months)?
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: Option 1: 20% down payment and financing at 5% simple interest per year for 3 years. What is the finance charge/interest be? Show the work
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?
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
Diane is deciding between two personal loans. For each loan, the loan amount is $7500. Use the ALEKS loan calculator for the following. Also use the regular ALEKS calculator, as necessary. Write your answers to the nearest cent. ALEKS Loan Calculator Loan amount: $ Loan term: Interest rate: Calculate years % Monthly payment: (a) For Loan A, the interest rate is 6.15% per year and the loan term is 7 years. Find the total amount to repay Loan A. S (b) For Loan B, the interest rate is 6.15% per year and the loan term is 5 years. Find the total amount to repay Loan B. (c) For which loan would she pay less, and by how much? Loan A The total amount paid is $ less. Loan B The total amount paid is $less. X Ľ