"Zero percent financing" means the obvious thing-that no interest is being charged on the loan. So if we borrow $1200 at 0% interest and pay it off over 12 months, our monthly payment will be $1200/12 = $100. Suppose you are buying a new truck at a price of $30,000. You plan to finance your purchase with a loan you will repay over two years. The dealer offers two options: either dealer financing with 0% interest, or a $3000 rebate on the purchase price. If you take the rebate, you will have to go to the local bank for a loan (of $27,000) at an APR of 6.5%. What would your monthly payment be if you took the rebate? (Round your answer to the nearest cent.) $ 1202.75 What would your monthly payment be if you used dealer financing? (Round your answer to the nearest cent.) $ 1250 Should you take the dealer financing or the rebate? (Assume you take the deal that saves you the most money.) O dealer financing O rebate How much would you save over the life of the loan by taking the option you chose? (Round your answer to the nearest cent.) $ 1250

"Zero percent financing" means the obvious thing-that no interest is being charged on the loan. So if we borrow $1200 at 0% interest and pay it off over 12 months, our monthly payment will be $1200/12 = $100. Suppose you are buying a new truck at a price of $30,000. You plan to finance your purchase with a loan you will repay over two years. The dealer offers two options: either dealer financing with 0% interest, or a $3000 rebate on the purchase price. If you take the rebate, you will have to go to the local bank for a loan (of $27,000) at an APR of 6.5%. What would your monthly payment be if you took the rebate? (Round your answer to the nearest cent.) $ 1202.75 What would your monthly payment be if you used dealer financing? (Round your answer to the nearest cent.) $ 1250 Should you take the dealer financing or the rebate? (Assume you take the deal that saves you the most money.) O dealer financing O rebate How much would you save over the life of the loan by taking the option you chose? (Round your answer to the nearest cent.) $ 1250

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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Suppose that you have decided to buy a certain car that costs $28,950, including taxes and license fees. The dealership gives you two financing options: 1) Option A: The dealership takes $800 off the price of the car. You must make a down payment of $2000 and can finance the rest at 2.99% APR for 72 months. a) How much will you be financing? b) How much will your monthly payments be under this option? (Round to the nearest dollar.) c) How much total money will you pay under this option? (Don’t forget to include your down payment.) 2) Option B: The dealership takes $1000 off the price and 0% financing for 36 months. a) How much will you be financing? b) How much will your monthly payments be under this option? (Round to the nearest dollar.) c) How much total money will you pay under this option? 3) Would you choose option A or option B? Why?
"Zero percent financing" means the obvious thing-that no interest is belng charged on the loan. So if we borrow $1200 at 0% interest and pay it off over 12 months, our monthly payment will be $1200/12 = $100. Suppose you are buying a new truck at a price of $10,000. You plan to finance your purchase with a loan you will repay over two years. The dealer offers two options: elther dealer financing with 0% interest, or a $1000 rebate on the purchase price. If you take the rebate, you will have to go to the local bank for a loan (of $9,000) at an APR of 6.5%. What would your monthly payment be if you took the rebate? (Round your answer to the nearest cent.) $1 What would your monthly payment be if you used dealer financing? (Round your answer to the nearest cent.) $1 Should you take the dealer financing or the rebate? (Assume you take the deal that saves you the most money.) O dealer financing O rebate How much would you save over the life of the loan by taking the option you chose? (Round…
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You want to buy a new sports coupe for $75,200, and the finance office at the dealership has quoted you a loan with an APR of 7.6 percent for 48 months to buy the car. What will your monthly payments be? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. What is the effective annual rate on this loan? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
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You are interested in purchasing an automobile but you require financing. The dealer has provided you with several loan options to finance the purchase. Your market rate of return for the risk that you pose various lenders is 7%; The automobile that you want to purchase has a sticker price of $35,000 and a competitive market value of $31,000. Here are your loan options Loan 1: loan has a term of 60 months, a contractual rate of interest of 8% and requires a down payment of $1500 for the purchase of the car. The loan allows you to claim a rebate of $1000 on the car at purchase. Loan 2: The loan has a term of 72 months, a contractual rate of 7.5% and requires a down payment of $500 for the purchase of the car. The loan allows you to claim a $500 rebate Loan 3: The loan has a term of 36 months a contractual interest rate of 0% and requires $4000 down. No rebate is available for this option. What is the monthly payment for loan 2 (rounded to the nearest whole…
You want to buy a new sports coupe for $75,200, and the finance office at the dealership has quoted you a loan with an APR of 7.6 percent for 48 months to buy the car. a. What will your monthly payments be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the effective annual rate on this loan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Monthly payment b. Effective annual rate %
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