Answered: how much would you save or lose by…

Business

Finance

how much would you save or lose by taking the debt consolidation company’s offer?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

See similar textbooks

Related questions

Q: You receive a credit card application from Shady Banks Savings and Loan offering an introductory…

A: Basically there are two interest rates. We will first find the future value at the of 6th month…

Q: You have a loan outstanding. It requires making five annual payments of $8,000 each of the end of…

A: Given: Amount = $8000 Number of periods = 5 Rate of interest = 7%

Q: On September 1, 2018, you bought a used car for $37,000. You paid $2,000 down and financed the…

A: From the given information first monthl payment on the loan is calculated and then using the monthl…

Q: You need to borrow $12,000 to buy a car, so you visit two banks and are given two alternatives. The…

A: Loan is a contract between lender and borrower where lender provide funds to borrower which repaid…

Q: The average college graduate owes $22,500 in loans incurred over his/her college career. Now that it…

A: To determine the monthly interest rate charged on the student loan.

Q: Angela read an advertisement for a P50,000 loan. The ad informs the borrower that the company only…

A: Interest = Principal × Interest rate = 50,000(0.18) = 9000 Interest per annum = 9000

Q: You have credit card debt of $25,000 that has an APR (monthly compounding) of 18%. Each month you…

A: The Annual Percentage rate (APR) is the percentage rate that shows the interest rate calculates on…

Q: You borrow $5,000 at 10% per year and will pay off the loan in 3 equal annual payments starting 1…

A: Principal = 5000 r = 10% period = 3 years after 1 year of taking loan payments = 2010.57 This annual…

Q: You needed $10,000 and obtained the following loan: Loan specifics: You are expected to pay 24 equal…

Q: You have a loan outstanding. It requires making seven annual payments of $6,000 each at the end of…

A: It is preferable to receive the amount due at the earliest so that the amount can be invested to…

Q: On March 1, Minnerly Motors obtains a business loan from a local bank. Theloan is a $25,000…

A: The formula to compute interest charge as follows:

Q: Suppose you graduate with a debt of $42,000 that you or someone must repay. One option is to pay off…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: The Corner Bar & Grill is in the process of taking a 5-year loan of $50,000 with First Community…

A: Amortization Schedule:-It is a schedule prepared for the loan installments which divide into the…

Q: Suppose that you take out a federal direct loan on September 1 before your senior year for $7500…

A: Grace period is the period in which the borrower is not required to pay the interest on loan. In…

Q: A certain college graduate borrows 8658 dollars to buy a car. The lender charges interest at an…

A: Installment is the amount of periodic payment a borrower has to make to its lender in order to pay…

Q: You have a loan outstanding. It requires making four annual payments of $6,000 each at the end of…

A: Annual payment = $6,000 Interest rate = 1% Period = 4

Q: You have credit card debt of $25,000 that has an APR (monthly compounding) of 17%. Each month you…

A: The computation of the additional borrowing as follows:

Q: Over the spring break, you shopped for a mortage for your first year since you heard the mortage…

A: Computation:

Q: Suppose that you take out a federal direct loan on September 1 before your senior year for $7500…

Q: An auto dealer has designed a marketing gimmick. They are asking their customers to pay only $119 at…

A: Monthly payment can be calculated with the help of below expression:

Q: You have graduated from college but unfortunately have $37,000 in outstanding loans. The loans…

A: A mortgage is the long term loan secured by collateral securities and repayment of which is done on…

Q: Aragon credit Union offers to lend Cassidy $35,000 to buy a car; the loan calls for payments of…

A: A concept that implies the future worth of the money is lower than its current value due to several…

Q: A local finance company will loan $15,000 to a homeowner. It is to be repaid in 36 monthly payments…

A: Loan Amount (Present Value) = 15,000 Future Value = 0 (Loan repaid in monthly installments with no…

Q: An engineer wants to purchase a house for $100,000 and has $20,000 cash to use as the down payment.…

A: Cost of house = $100,000 Down payment = $20,000 Interest rate = 9% Time period = 20 years Payment…

Q: You have a loan outstanding. It requires making five annual payments of $7,000 each of the end of…

A: In order to remain indifferent between the two options,One large payment at the end of the loan’s…

Q: You have an outstanding student loan with required payments of $825 per month for the 42 months. The…

A: Monthly payment refers to the equal payments that are required to be paid by the borrower to the…

Q: A credit card offers an introductory rate of 7% compounded monthly for the first six months,…

A: A credit card is a short-term credit facility provided by the banks to its customers. Interest is…

Q: What effective annual rate (EAR) are they charging us on the loan?

A: Effective Annual Rate: It refers to the true annual rate on a loan/credit or on investment since it…

Q: LOA Bank Limited quotes a 9 percent interest rate on loans for 1 year. You are seeking a loan of…

A: Given data: loan amount = $50,000 Repayment amount = $54,500 Number of payments =12 monthly payment…

Q: You are to pay a bill in Meralco every month for 5 years. The accumulated amount of the payment you…

A: If someone paid an equal amount in the difference of equal interval then it is classified as the…

Q: Use the following information to answer the next three questions below: You buy a house on July 1.…

A: Laon amortization schedule means where repayment during the life of loan is written with interest.

Q: You currently have two loans outstanding: a car loan and a student loan. The car loan requires that…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: The Fly-by-Night finance company advertises a “bargain 6%plan” for financing the purchase of…

A: Effective interest rate is the rate that is paid to a loan or earned on an investment as a result of…

Q: You have a $22,000 credit card balance with an APR of 16.9%, compounded monthly, and you can afford…

A: PV 22000 RATE 17% COMPOUNDING PER YEAR 12 PMT 400 TIME PMT PRINCIPAL…

Q: You have credit card debt of $25,000 that has an APR (monthly compounding) of 18%. Each month you…

A: APR of old card = 18% APR of New Card = 9% Number of months in year = 12 (i) Monthly Interest rate…

Q: You plan to make five deposits of $1000 each, one every 6 months, with the first payment being made…

A: "In case when multiple questions are posted we will answer the first question when no other question…

Q: A credit cooperative recently offers a 36-month loan at 4.15% compounded monthly for typhoon victim…

Q: To purchase a used automobile, you borrow $10,000 from Loan Shark Enterprises. They tell you the…

A: The APR is the annualized measure of the costs of borrowing, the APR will increase when the cost of…

Q: You have a credit card that has a balance of $11,020 at an APR of 20.49 %.You plan to pay $400 each…

A: The number of months required to pay off the balance can be computed with the help of NPER function…

Q: A local finance company quotes an interest rate of 17.2% on one-year loans. So, if you borrow…

A: In this question we need to compute the effective annual rate (EAR) from following details : Present…

Q: If you buy a computer directly from the manufacturer for $2,241 and agree to repay it in 48equal…

A: Using Excel PMT function.

Q: A chiropractic student receives a 10-year PLUS Loan for $50,000 to complete the last 2 years of the…

A: Loan (L) = $50000 n = 10 years = 120 months r = 5.48% per annum = 0.45667% per month Let the monthly…

Q: You have just purchased a car and taken out a $48,000 loan. The loan has a five-year term with…

A: In Installment payment system, loan in not paid collectively with interest due but interest and…

Q: You currently have two loans outstanding: a car loan and a student loan. The car loan requires that…

A: In this question equal payment is paid monthly in future. So we have to find present value of loan.

Concept explainers

Loans

A loan is a term that we are all familiar with. The processing of loans is one of the most important functions of a bank. It keeps our economy stable and facilitates the implementation of monetary policies. Let's take a look at the different forms of loans and get some answers to some common questions.

Question

You currently have two loans outstanding: a car loan and a student loan. The car loan requires that you pay $308 per month, starting next month for 35 more months. Your student loan requires that you pay $132 per month, starting next month for the next 105 months.

A debt consolidation company gives you the following offer: It will pay off the balances of your two loans today and then charge you $455 per month for the next 48 months, starting next month. If your investments earn 3.55% APR, compounded monthly, how much would you save or lose by taking the debt consolidation company’s offer?

If you lose, state your answer with a negative sign (e.g., -25,126)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Suppose that you borrow $5500 for your first year and $6500 for your second year (the maximum amounts for a dependent student), as federal direct student loans at a 4.29% interest rate. Suppose that each loan begins on September 1 of its year, that you finish college in four years, that you do not pay the accruing interest in the meantime, and that you begin repayment on December 1 after graduation. You also borrow $7500 for each of your third and fourth years, again on September 1, all at a 4.29% interest rate. You finish college in four years, and you begin repayment on December 1 after graduation.What is your total debt then, and how much of that is interest?
You need to borrow $12,000 to buy a car, so you visit two banks and are given two alternatives. The first bank allows you to pay $2595.78 at the end of each year for six years. The first payment is to be made at the end of the first year. The second bank offers equal monthly loan payments of $198.87, starting at the end of first month. What are the interest rates that the banks are charging? Which alternative is more attractive?
You get a personal loan from the bank for $10,500, the interest rate you are charged is 8% for two years. What interest do you pay the bank?
You want to purchase an automobile for $24,726. The dealer offers you 0% financing for 48 months or a $3,549 rebate. You can obtain 5.7% financing for 48 months at the local bank. Which option should you choose? How much money will you save per month?
Jason Stein from Topeka, Kansas, borrows $1,500 (including interest) for four years (48 months) at an interest rate of 7% per year. The loan uses the discount method for determining the amount of interest. How much of the loan amount ($1,500) consists of interest? How much of the loan is actually given directly to Jason? What is the monthly payment (rounded to the nearest penny), assuming 48 monthly payments?
Suppose that you borrow $5500 for your first year and $6500 for your second year (the maximum amounts for a dependent student), as federal direct student loans at a 4.29% interest rate. Suppose that each loan begins on September 1 of its year, that you finish college in four years, that you do not pay the accruing interest in the meantime, and that you begin repayment on December 1 after graduation. What is your total debt on that December 1, and how much of that is interest? The first loan accumulates interest of $5500 ×× 51 ≈ $1002.79, and the second loan accumulates interest of $6500 ××39 = $906.26. Your total debt is $5500 + $1002.79 + $6500 + $906.26 = $13,909.05, including a total of $1909.05 in interest.
Hazel has taken out a 40,000 loan that requires quarterly payments of $2300 over over five years. What is the APR for this loan how do I answer this using the TVM function
You want to purchase an automobile for $31,074 . The dealer offers you 0% financing for 48 months or a $6,061 rebate. You can obtain 5.7% financing for 48 months at the local bank. Which option should you choose?
A friend asks to borrow 455 form you and in return will pay you $58 in one year. If your bank is offering a 6% interest rate on deposits and loans: a) how much would you have in one year if you depostied the $55 instead? b) how much money could you borrow today if you pay the bank $58 in one year?
You go to the loan fund of the company where you work and find that they have an emergency fund whose regulations establish that the credits will be paid in monthly installments for 12 months, and that the installments 3,6,9 and 12 will be double the others. Likewise, the interest is 3 % per month. The amount that they will lend depends on the installment. a) If you are loaned $500,000, what will the normal payments be? b) If your regular payments are $10,000, what would be the value of the loan?
A local car dealer offers a customer a 3-year car loan of $15,000 using “add-on” interest.The first payment must be made in 30 days. What are the nominal and effective annual interest rates?
You finance your college education with a student loan. Every month, you borrow $1,000 to pay for living expenses. While in college, you do not have to pay interest on the loan, nor do you need to pay back any loan principal. However, the interest accrues to your loan balance. Assume an annual interest rate of 6% on your student loan, what will be your loan balance when you graduate in four years (round your answer to the nearest dollar)? $52,495 None of these are correct $48,000 $54,098 50,880