The cardio equipment at a fitness studio needs to be replaced. The cost of new equipment is $16 500. The owner of the studio does not have enough cash to pay for it. She has two options: • Use a line of credit with an interest rate of 12.4%, compounded monthly. • Lease the equipment for 2 years, for $1000 down and $480 each month. a) What is the cost of buying with a line of credit if the owner pays off the loan in 2 years? b) What is the cost of leasing for 2 years? c) The equipment depreciates at 30% per year. What is its value after 2 years?

The buyer of a piece of real estate is often given the option of buying down the loan. This option gives the buyer a choice of loan terms in which various combinations of interest rates and discount points are offered. The choice of how many points and what rate is optimal is often a matter of how long the buyer intends to keep the property. Darrell Frye is planning to buy an office building at a cost of $983,000. He must pay 10% down and has a choice of financing terms. He can select from a 9% 30-year loan and pay 4 discount points, a 9.25% 30-year loan and pay 3 discount points, or a 9.5% 30-year loan and pay 2 discount points. Darrell expects to hold the building for four years and then sell it. Except for the three rate and discount point combinations, all other costs of purchasing and selling are fixed and identical. (Round your answers to the nearest cent. Use this table, if necessary.)   (d): If Darrell chooses the 2-point 9.5% loan, what will be his total outlay in points…

A friend of yours just bought a new sports car with a $5,000 down payment,and her $30,000 car loan is financed at an interest rate of 0.75% per month for 48 months. After two years, the “Blue Book” value of her vehicle in the used-car marketplace is $15,000. Solve, a. How much does your friend still owe on the car loan immediately after she makes her 24th payment? b. Compare your answer to Part (a) to $15,000. This situation is called being “upside down.” What can she do about it? Discuss your idea(s) with your instructor.

The buyer of a piece of real estate is often given the option of buying down the loan. This option gives the buyer a choice of loan terms in which various combinations of interest rates and discount points are offered. The choice of how many points and what rate is optimal is often a matter of how long the buyer intends to keep the property. Darrell Frye is planning to buy an office building at a cost of $986,000. He must pay 10% down and has a choice of financing terms. He can select from a 9% 30-year loan and pay 4 discount points, a 9.25% 30-year loan and pay 3 discount points, or a 9.5% 30-year loan and pay 2 discount points. Darrell expects to hold the building for three years and then sell it. Except for the three rate and discount point combinations, all other costs of purchasing and selling are fixed and identical. (Round your answers to the nearest cent. Use this table, if necessary.) I want to know how to find this out: If Darrell chooses the 4-point 9% loan, what will be his…

3. Chrissy is looking to buy a new bedroom set for $9674.99 She would also have to pay a $300 delivery fee. She is considering the following two credit options: Financing through the store at 3.7%, compounded monthly for a term of 2 years, with the incentive that the dealership will remove the shipping charge AND give a $500 rebate. • A bank loan at 3.5%, compounded monthly, for a term of 3 years. a. What are the monthly payments for each option? b. What is the total payment for each option? c. Which option should she choose and why? d. Why might she choose the other option?

John and Chelsea decide they would like to buy furniture. 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.     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 Chelsea 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% simple interest per year. How long will the term of the loan need to be if they want to earn $500…

The buyer of a piece of real estate is often given the option of buying down the loan. This option gives the buyer a choice of loan terms in which various combinations of interest rates and discount points are offered. The choice of how many points and what rate is optimal is often a matter of how long the buyer intends to keep the property. Darrell Frye is planning to buy an office building at a cost of $984,000. He must pay 10% down and has a choice of financing terms. He can select from a 9% 30-year loan and pay 4 discount points, a 9.25% 30-year loan and pay 3 discount points, or a 9.5% 30-year loan and pay 2 discount points. Darrell expects to hold the building for three years and then sell it. Except for the three rate and discount point combinations, all other costs of purchasing and selling are fixed and identical. (Round your answers to the nearest cent. Use this table, if necessary.) (a) What is the amount being financed? $ (b) If Darrell chooses the 4-point 9% loan, what…

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A used car that currently costs $25,000 will have a market value of $8,000 in four years. As a student, you cannot afford to pay $25,000, but you want to have a car while you are going to university for the next four years. Your father agrees to lend you $25,000 on the condition that you pay him $300 at the end of every month for the next four years and $25,000 at the end of the four years. The car dealer provides financing facilities, and you are qualified to get a lease for which you will have to make monthly, end-of-month payments of $650 for 48 months. Which option will leave you better off, assuming your opportunity cost is 6 percent?

You are in the process of getting a new car but are not sure if you should buy or lease. The total cost of the car is $21,000, and you have a $275 monthly spend budget for payments. If you lease the car, the terms of the lease will be forty-eight months at an APR of 2.25%. The residual value of the car is $8,000. If you buy the car, a bank will offer an APR of 2.70% and seven years to repay the loan. You are not required to make a down payment with either the lease or loan options, and payments are made at the end of the month for both options. Should you lease or buy the car given your budget limit of $275 a month? Create a new workbook that shows the difference between leasing and buying the car in terms of monthly payments.