You wish to purchase a new jewellery piece for your girlfriend, which will cost $16,300. You...

You wish to purchase a new jewellery piece for your girlfriend, which will cost $16,300. You have arranged a loan that only covers part of the purchase price. You intend to finance the rest of the purchase with money from your own savings. The loan requires payments of $250 per month for 3 years. The interest rate on the loan is 6.5% p.a. compounded semi-annually. How much of your own savings must you use?

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Expert Solution

APR(monthly) = 12[(1 + 0.065/2)^1/6 - 1] = 6.414%

Calculting Value of Loan,

Using TVM Calculation,

PV = [FV = 0, PMT = 250, N = 36, I = 0.06414/12]

PV = $8,167.30

Amount from saving = 16,300 - 8,167.30

Amount from saving = $8,132.70

jeff jeffy answered 2 years ago

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