Question

In: Finance

Jenny borrowed $50,000 to purchase a family car. The terms ofher loan require making quarterly...

Jenny borrowed $50,000 to purchase a family car. The terms of her loan require making quarterly payments of $2,830.1323 over 7 years. The discount rate is 14% per annum (compounded quarterly). How much sooner will she pay off the loan if she makes quarterly payments of $3,793 instead? Round your answer to the whole number

a. 10 quarters

b. 12quarters

c. 20 quarters

d. 15 quarters

e. 18 quarters

Solutions

Expert Solution

First, we will find the number of payments with quarterly payments of $3,793

PMT = -3,793

PV = 50,000

I/Y = 14%/4 = 3.5%

FV = 0

CPT N

N = 17.98582227

N ~ 18

It takes 18 quarters to payoff the loan with quarterly payments of $3,793

Earlier it used to take 7 * 4 = 28 quarters to payoff the loan with quarterly payments of $2,830.1323

That is 28 - 18 = 10 quarters sooner

Option a is correct

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

You borrowed $20,000 to purchase a new car. The loan was for 4 years at a...
You borrowed $20,000 to purchase a new car. The loan was for 4 years at a nominal rate of 6% per year compunded monthly. You have been making equal monthly payments on the loan. You just made your 18th payment. A) What is your monthly payment B) How much of your first payment was interest? How much of your current (18th) payment is interest? C) How much of the loan has been repaid immediately after the 18th payment? D) Based...
You just borrowed $50,000 to buy a car. You will pay back this loan with monthly...
You just borrowed $50,000 to buy a car. You will pay back this loan with monthly payments of $1,610 for 4 years. What is the APR (annual percentage rate) on this loan? What is the effective annual rate associated with an 8% nominal annual rate (r = 0.08) when interest is compounded (1) annually: (2) semiannually: (3) quarterly: (4)monthly: You negotiate a great deal and your bank agrees to lend you money for 30 years at 4% APR (annual percentage...
Fairfax Paint just borrowed 62,900 dollars. The terms of the loan require the company to make...
Fairfax Paint just borrowed 62,900 dollars. The terms of the loan require the company to make equal semi-annual payments forever. The first semi-annual payment is due in 6 months. If the regular semi-annual loan payment is 4,450 dollars, then what is the EAR of the loan? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098. Caruso is planning to save 4,924.24 dollars every quarter for 12 years....
Celeste just borrowed 47,700 dollars. She plans to repay this loan by making equal quarterly payments...
Celeste just borrowed 47,700 dollars. She plans to repay this loan by making equal quarterly payments of 2,271.5 dollars for 27 quarters. If she makes her first quarterly payment later today, then what is the quarterly interest rate on the loan? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
3. Loan Interest. Sharon is considering the purchase of a car. After making the down payment,...
3. Loan Interest. Sharon is considering the purchase of a car. After making the down payment, she will finance $11,450.00. Sharon is offered 3 maturities. On a four-year loan she will pay $284.93 per month. On a five-year loan, Sharon’s monthly payment will be $237.68. On a six-year loan they will be $206.39. Sharon rejects the four-year loan, as it is not within her budget. How much interest will Sharon pay over the life of the five-year loan? Of the...
Loan Interest. Sharon is considering the purchase of a car. After making the down payment, she...
Loan Interest. Sharon is considering the purchase of a car. After making the down payment, she will finance $10,050. Sharon is offered these three maturities. On a four year loan, sharon will pay $240.66 per month, on a five-year loan, Sharons monthly payments will be $199.00. On a six-year loan, they will be $171.34. Sharon rejects the four year loan, as it is not within her budget. So, Sharon would pay $1,890.00 in interest over the life of the five...
You borrow $30,875 to purchase a car, all included. The loan terms are 48 months at...
You borrow $30,875 to purchase a car, all included. The loan terms are 48 months at 3.6% interest (APR = 3.6%). What is your monthly car payment? a. $691.62 b. $679.37 c. $645.58 d. $637.71
The example loan conditions are (enter these values under Loan Terms): Loan amount borrowed (principal or...
The example loan conditions are (enter these values under Loan Terms): Loan amount borrowed (principal or pv) $100,000 Loan interest (rate) is 7.5% Loan term (number of payments or nper) is 9 years Annual payments of principal and interest Calculate the annual loan payment in cell C7 using the PMT function in Excel. The PMT function is in the formulas under the Financial menu option. In the PMT Menu box, the Rate is the interest rate, Nper is the number...
You have just purchased a car and taken out a $50,000 loan. The loan has a...
You have just purchased a car and taken out a $50,000 loan. The loan has a 5-year term with monthly payments and an APR of 6%. How much will you pay in interest, and how much will you pay in principle, during the first month and second month? (Hint: construct an amortization table to show the breakdown of interest and principal paid in the first two months).
You have just purchased a car and taken out a $50,000 loan. The loan has a​...
You have just purchased a car and taken out a $50,000 loan. The loan has a​ five-year term with monthly payments and an APR of 6.0%. How much will you pay in​ interest, and how much will you pay in​ principal, during the 1st, 2nd, and 12th month? How much will you pay in​ interest, and how much will you pay in​ principal, at the end of the 4th year​? How much will you pay in​ interest, and how much...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT