Question

In: Finance

You would like to purchase a new car in 4 years after you graduate college. The...

You would like to purchase a new car in 4 years after you graduate college. The car you want to buy currently costs $35,000, but you expect the price of this model of car to increase by 5% per year for the next 4 years. How much do you have to invest today if you savings account earns 3% APR (nominal) to exactly pay for your new car?

$421,657

$38,122

$42,543

$37,799

please work out and show how nominal rate works into the problem

Solutions

Expert Solution

jeff jeffy answered 1 month ago
Next > < Previous

Related Solutions

You are a college student and you plan to purchase a new car after you graduate...
You are a college student and you plan to purchase a new car after you graduate and begin your first job. You want to start saving for a down payment now on a new car in the future . You decide to make monthly payment into a saving account, which earns 2.5% annual interest compounded monthly. You will calculate a monthly payment into the saving account for each scenario. A.To save $4,000 for 3 years. B.To save $5,000 for 3...
Suppose you intend to purchase a new car after you graduate. You expect to put $5,000...
Suppose you intend to purchase a new car after you graduate. You expect to put $5,000 down and finance the balance over a 5-year period. The maximum amount you are willing to pay each month is $600. What is the maximum price you can pay for the car in other words, how much you can afford to pay for the car, assuming an interest rate of 8% per year, compounded monthly?
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...
Your company is considering the purchase of a new machine. After 4 years of operation, you...
Your company is considering the purchase of a new machine. After 4 years of operation, you would sell the machine for a salvage value of $46001. However, at that time the machine would not have been depreciated to a value of 0, but have a remnant book value of $19746. The operation of the machine requires additional NOWC of $31636, which would not change throughout the project. The firm's corporate tax rate is 40%. What is the project's Terminal Cash...
Your company is considering the purchase of a new machine. After 4 years of operation, you...
Your company is considering the purchase of a new machine. After 4 years of operation, you would sell the machine for a salvage value of $71012. However, at that time the machine would not have been depreciated to a value of 0, but have a remnant book value of $19464. The operation of the machine requires additional NOWC of $36223, which would not change throughout the project. The firm's corporate tax rate is 40%. What is the project's Terminal Cash...
After deciding to buy a new car, you can either lease the car or purchase it...
After deciding to buy a new car, you can either lease the car or purchase it on a two-year loan. The car you wish to buy costs $36,000. The dealer has a special leasing arrangement where you pay $101 today and $501 per month for the next two years. If you purchase the car, you will pay it off in monthly payments over the next two years at an APR of 5 percent. You believe you will be able to...
You would like to purchase a car that costs $32,000. You have decided to finance the...
You would like to purchase a car that costs $32,000. You have decided to finance the car with a four-year car loan. If the APR (annual percentage rate) is 5 percent, compute your monthly payment. Construct a loan amortization table in Excel for the car loan.   You should do the problem in Excel using monthly payments and should submit the spreadsheet.
You would like to buy yourself a fabulous new car. You have $50,000 but the car...
You would like to buy yourself a fabulous new car. You have $50,000 but the car costs $68,500. If you can earn 9% interest on a two year investment, how much would you have to invest today to buy the car in two year? Do you have enough? Assume the price of the car will remain the same. N = I = PV = PMT = FV = P/Y =
7. After deciding to buy a new car, you can either lease the car or purchase...
7. After deciding to buy a new car, you can either lease the car or purchase it on a three-year loan. The car you wish to buy costs $44,000. The dealer has a special leasing arrangement where you pay $1,000 per month, at the beginning of each month, for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at a 3.6% APR. You believe you will be...
1a) You would like to purchase a car that costs$34,000.  You have decided to finance the...
1a) You would like to purchase a car that costs $34,000.  You have decided to finance the car with a six-year car loan.  If the APR (annual percentage rate) is 4.25 percent, compute your monthly payment.1b) Construct a loan amortization table in Excel for the car loan in Problem 1a.   You should do the problem in Excel using monthly payments and should submit the spreadsheet.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT