Question
In: Finance
Suppose that you are thinking about buying a car and have narrowed down your choices to...
Suppose that you are thinking about buying a car and have narrowed down your choices to two options.
The new car option: the new car costs $26,000 and can be financed with a four-year loan at 7.54%.
The used car option: a three-year old model of the same car costs $14,000 and can be financed with a three-year loan at 7.07%.
What is the difference in monthly payments between financing the new car and financing the used car? Use PMT formula
The difference in monthly payments between financing the new car and financing the used car is $____.
Solutions
Expert Solution
The new car option:
New Car Loan amount = $26,000
Calculating the Monthly payment of new Car using Excel "PMT" Function:-
Monthly Loan Payment of new Car is $629.14
- The used car option:
Used Car Loan amount = $14,000
Calculating the Monthly payment of used Car using Excel "PMT" Function:-
Monthly Loan Payment of used Car is $432.73
The difference in monthly payments between financing the new car and financing the used car = $629.14 - $432.73
The difference in monthly payments between financing the new car and financing the used car = $196.41
If you need any clarification, you can ask in comments.
If you like my answer, then please up-vote as it will be motivating
jeff jeffy answered 1 year agoRelated Solutions
You are thinking about investing money in the stock market and have narrowed your choices to...
You are thinking about investing money in the stock market and
have narrowed your choices to one of two stocks: TD Bank or Cenovas
Energy. For TD Bank you have the following statistics:
• Mean monthly closing price:
$75.00 • Sample standard
deviation: $6.00
The monthly closing stock prices of
Cenovas Energy for the last eight months is shown below:
Closing Stock Price: ($)
14.00 14.50 11.00 13.00 13.75 11.00 8.75 10.00
Calculate the mean stock price of Cenovas Energy. [2
marks]
Calculate the standard deviation for the sample prices...
Suppose you are thinking of buying a new car. One of the choices you are considering...
Suppose you are thinking of buying a new car. One of the choices
you are considering is a hybrid car. This hybrid model car is
$9,000 more expensive than a traditional model; however, the hybrid
model will get 40 miles per gallon of gas as compared to 30 miles
per gallon for the traditional model. You expect the cost of gas to
hover around $3.60 in the foreseeable future.
Given the information above and your knowledge of CVP, answer
the...
Suppose you are thinking of buying a new car. One of the choices you are considering...
Suppose you are thinking of buying a new car. One of the choices
you are considering is a hybrid car. This hybrid model car is
$9,000 more expensive than a traditional model; however, the hybrid
model will get 40 miles per gallon of gas as compared to 30 miles
per gallon for the traditional model. You expect the cost of gas to
hover around $3.60 in the foreseeable future.
Given the information above and your knowledge of CVP, answer
the...
Suppose you are considering purchasing a new car. You and your spouse have narrowed it down...
Suppose you are considering purchasing a new car. You and your
spouse have narrowed it down to two choices:
a. Sedan Initial Price: $27,300
Annual O&M: $4,456
Expected trade-in value after 5 years: $9,100
b. SUV Initial Price: $38,795
Annual O&M: $3,050
Expected trade-in value after 5 years: $18,544
If you intend to keep your new vehicle for 5 years, then trade
it in, determine the net present value (NPV) of each alternative,
assuming a discount rate of 4.0%. Which...
u are looking for a car and have narrowed it down to two options. You can...
u are looking for a car and have narrowed it down to two
options. You can buy a new car at a cost of $23,995, which has
estimated life of 12 years and annual maintenance costs of $750 per
year. Your second option is a used car at a cost of $14,225, with
an estimated remaining life of 7 years and annual maintenance costs
of $1800 per year. Which is the cheaper option, given your
borrowing cost of 7%?
You are thinking of buying a used car for $4,000 for driving to school. Your parents...
You are thinking of buying a used car for $4,000 for driving to
school. Your parents are willing to lend you the $4,000 and charge
only 2.4% APR. They want the loan repaid equally in 48 monthly
payments, with the first payment due at the end of the month in
which you buy the car. You estimate that the monthly cost of
operating the car, including gas, insurance, maintenance and
licence fees will be $200 and payable at the start...
Your company is thinking about acquiring another corporation. You have two choices; the cost of each...
Your company is thinking about acquiring another corporation.
You have
two choices; the cost of each choice is $250,000. You cannot
spend more
than that, so acquiring both corporations is not an option.
The
following are your critical data:
a. Corporation A:
1) Revenues = 100K in year one, increasing by 10% each year.
2) Expenses = 20K in year one, increasing by 15% each year.
3)
Depreciation Expense = 5K each year.
4) Tax Rate = 25%
5) Discount...
You are buying a car for $10,000. You will put down $1,000 of your own money...
You are buying a car for $10,000. You will put down $1,000 of
your own money and
get a loan for the rest of the purchase price. The bank offers you
the following loan
terms: APR 6% (Annual percentage rate), 1 year loan with monthly
payments.
1. Calculate the amount of the loan payment (PMT):
2. Create an amortization schedule paying off the loan.
You are buying a car for $35,000. You will put $2,000 of your own money down...
You are buying a car for $35,000. You will put $2,000 of your
own money down and get a loan for the rest of the purchase price.
The bank offers you the following loan terms: APR 12% (Annual
percentage rate), 6 year loan with annual payments.
Calculate the amount of the loan payment (PMT):
Create an amortization schedule paying off the loan.
An energy efficient car Consider someone who is thinking about buying a new car, and trying...
An energy efficient car Consider someone who is thinking about
buying a new car, and trying to decide which one to buy. They plan
to use the car mostly for commuting. They live 35 miles from work,
and will commute 190 days per year. They know that the cost of gas
in the Bay Area is currently around $3.00/gallon, the cost of
electricity is around $0.15/kWh. For simplicity, they decide to
assume that those prices won’t change, and that inflation...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 2. Do you agree with Nietzsche’s claim that “every elevation of the type ‘man’ has hitherto...
- Question: The function predictAnswer should be made based on the following. Your answer must be able...
- A 2.5 mm -diameter sphere is charged to -4.5 nC . An electron fired directly at...
- On June 30, 2017, Wisconsin, Inc., issued $158,250 in debt and 19,400 new shares of its...
- The Ivanhoe Department of Transportation has issued 25-year bonds that make semiannual coupon payments at a...
- Task 1: Investigating Hashing software and the basic usage (total 9 marks) In this task, you...
- Problem 12-22 Accept or Reject a Special Order [LO12-4] Polaski Company manufactures and sells a single...
ADVERTISEMENT