Question

Answer all please, If you can't answer all then don't just answer one.

20. You want to purchase a car that costs $30,589. You can afford $1,505 as a down payment and will borrow the rest. The bank has offered you a rate of 3.64% on a 4-year loan. What is your  monthly payment?
21. You borrowed $27,797 to buy a car. If you pay $407 per month, you will pay it off after making 62 payments. If you pay $40 more each month, you will pay it off 6 months sooner. How much total interest will you save?
22. You borrowed $20,939 to buy a car. If you pay $365 per month, you will pay it off after making 65 payments. How much total interest will you pay?
23. You took out a 4-year loan loan of $13,891.  Your monthly payment is $314.81, How much total interest will you pay?
24. A preferred stock will pay a dividend of $2 per year. If the annual return is 6.89%, what is the stock worth today?

Answer 1

Question 20:

Car Price = $30,589

Loan Amount = PV = Car price - down payment = $30,589 - $1,505 = $29,084

r = monthly interest rate = 3.64%/12 = 0.30333333%

n = 4*12 = 48 months

Monthly loan payment = [r*PV] / [1 - (1+r)^-n]

= [0.30333333% * $29,084] / [1 - (1+0.30333333%)^-48]

= $88.2214666 / 0.135305885

= $652.015

Therefore, monthly loan payment is $652.02

Question 21:

Total amount paid for 62 installments = 62 * $407 = $25,234

Total amount paid for 56 installments = 56 * $447 = $25,032

Interest saved ith new payments = $25,234 - $25,032 = $202

Therefore, interest saved is $202

Question 22:

Loan Amount = $20,939

Total payments made = 65 * $365 = $23,725

Interest paid = Total payments made - loan amount

= $23,725 - $20,939

= $2,786

Therefore, total interest aid over the loan is $2,786

Quesiton 23:

Loan Amount = $13,891

Total payments made = (4*12) * $314.81 = $15,110.88

Interest paid = Total payments made - loan amount

= $15,110.88 - $13,891

= $1,219.88

Therefore, total interest aid over the loan is $1,219.88

Question 24:

Dividend paid = D = $2

Annual return = r = 6.89%

Worth of stock today = D / r

= $2 / 6.89%

= $29.0275762

Therefore, stock worth today is $29.03