answer question in image Meg wants to save for college. The college program she has chosen costs around $6000 a year and is atwo year program. She has to take out a student loan to cover the entire cost for both years. Once shehas finished college she has to repay the loan. The good news is that interest is not calculated while sheis in school, but only after she finishes. What should she do?Option A:Should she repay the loan back in 3 years at 2.9% making monthly payments?Option B:Should she repay the loan back in 5 years at 2.9% making monthly payments?Cost of Borrowing Monthly CostAmountborrowedOption AOption BYour advice forMeg:ProsConsTotal cost ofschooling

The Monthy payments refer to the loan amount that is to be repaid by the borrower to the lender…

Option B: Should she repay the loan back in 5 years at 2.9% making monthly payments? Cost of Borrowing Monthly Cost Amount borrowed Option A Option B Your advice for Meg: Pros Cons Total cost of schooling

Option B: Should she repay the loan back in 5 years at 2.9% making monthly payments? Cost of Borrowing Monthly Cost Amount borrowed Option A Option B Your advice for Meg: Pros Cons Total cost of schooling

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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answer question in image

Meg wants to save for college. The college program she has chosen costs around $6000 a year and is a
two year program. She has to take out a student loan to cover the entire cost for both years. Once she
has finished college she has to repay the loan. The good news is that interest is not calculated while she
is in school, but only after she finishes. What should she do?
Option A:
Should she repay the loan back in 3 years at 2.9% making monthly payments?
Option B:
Should she repay the loan back in 5 years at 2.9% making monthly payments?
Cost of Borrowing Monthly Cost
Amount
borrowed
Option A
Option B
Your advice for
Meg:
Pros
Cons
Total cost of
schooling

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Deborah can't decide whether she wants to buy and car or lease a car. She is looking at a $48,000 car. If she buys it, she will take out a 3-year loan at 3.95% interest. N= FV= 1%= P/Y= PV= C/Y= PMT= End or Begin If she can sell the car after 3 years for $40,000, what is the total amount she will pay over the life of the loan?
1) How much total interest will Ashley pay over 10 years if she only makes minimum payments Scenario: Ashley decides to pay 500 total to her student loans each month. She continues the minimum payment on the loan with the lower interest rate and puts the rest of the $500 towards the higher interest rate loan until it's paid off. Then she puts all $500 towards the lower interest rate loan until it is paid off. a) How much total interest will Ashley pay in this scenario? b) How much does she save by increasing her payments in this way
Deborah can't decide whether she wants to buy and car or lease a car. She is looking at a $48,000 car. If she buys it, she will take out a 3-year loan at 3.95% interest. N= FV= 1%= P/Y= PV= C/Y= PMT= End or Begin What is the total amount that Erin will pay over the life of the loan?
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