For questions 1 - 9: A recent university graduate is purchasing a new Honda Civic LX Sedan for $20,345, which includes destination and handling charges. The term of the loan is 5 years (60 months). Payments are made monthly. The interest rate is 5%. The loan is a closed end credit loan. Sales tax is 7% (Indiana) and is included in the loan. Sales tax is owed on the new vehicle price minus the trade-in value. The graduate is trading in their current vehicle, which has a trade-in value of $4,000 and is owned free and clear. The only equity in the transaction is the trade-in vehicle. There currently are no rebate offers or other incentives by Honda on Civics. 6. How much of the first monthly payment will be interest and the how much interest is in the last monthly payment? $75.37 and $2.25 $79.50 and $1.03 $84.88 and $3.59 $72.87 and $1.37

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter7: Using Consumer Loans
Section: Chapter Questions
Problem 9FPE: Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five...
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For questions 1 - 9: A recent university graduate is purchasing a new Honda Civic LX
Sedan for $20,345, which includes destination and handling charges. The term of the loan
is 5 years (60 months). Payments are made monthly. The interest rate is 5%. The loan is a
closed end credit loan. Sales tax is 7% (Indiana) and is included in the loan. Sales tax is
owed on the new vehicle price minus the trade-in value. The graduate is trading in their
current vehicle, which has a trade-in value of $4,000 and is owned free and clear. The
only equity in the transaction is the trade-in vehicle. There currently are no rebate offers
or other incentives by Honda on Civics.
6. How much of the first monthly payment will be interest and the how much interest is
in the last monthly payment?
$75.37 and $2.25
$79.50 and $1.03
$84.88 and $3.59
O $72.87 and $1.37
Transcribed Image Text:For questions 1 - 9: A recent university graduate is purchasing a new Honda Civic LX Sedan for $20,345, which includes destination and handling charges. The term of the loan is 5 years (60 months). Payments are made monthly. The interest rate is 5%. The loan is a closed end credit loan. Sales tax is 7% (Indiana) and is included in the loan. Sales tax is owed on the new vehicle price minus the trade-in value. The graduate is trading in their current vehicle, which has a trade-in value of $4,000 and is owned free and clear. The only equity in the transaction is the trade-in vehicle. There currently are no rebate offers or other incentives by Honda on Civics. 6. How much of the first monthly payment will be interest and the how much interest is in the last monthly payment? $75.37 and $2.25 $79.50 and $1.03 $84.88 and $3.59 O $72.87 and $1.37
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