Your sister Steffi recently purchased a new car that cost $40,000. She paid 5% of the...

Your sister Steffi recently purchased a new car that cost $40,000. She paid 5% of the purchase price in cash and took out a 5-year loan for the remainder. The loan has an annual interest rate of 6% and requires monthly payments at the end of each month. At the end of the loan, how much will Steffi have paid in total for the car and how much total interest will Steffi have paid on the loan?

Total paid for the car is $40,000.00, including interest of $4,078.79
Total paid for the car is $44,078.79, including interest of $4,078.79
Total paid for the car is $46,078.79, including interest of $6,078.79
None of the above.

2. Sofia Kenin is thinking about a plan for retirement savings. She is 21 years old now and she would like to retire the day after her 65^th birthday. Her plan is to invest $18,000 each year on her birthday. She plans to make her first investment on her 25^th birthday and her last investment on her 65^th birthday. She expects her retirement account to earn 6% each year.

How much more would she have in her account after she makes the investment on her 65^th birthday if, instead of investing $18,000 on each birthday from her 25^th through her 65^th, she invested $1,500 monthly beginning on her 25^th birthday?

No more - She would have the same amount.
$61,500.00
$201,520.72
$219,127.33

3. Kerber is considering buying a tennis school from Navratilova who wants to sell it and retire. Navratilova is asking for a $1,000,000 payment at the sale date, and a five-year payout consisting of $150,000 at the end of the first and second years after the sale date and $233,333 at the end of the third, fourth and fifth years after the sale date. If Kerber agrees to Navratilova’s terms, and she believes that 10% is an appropriate discount rate, how much does Kerber need today in order to pay Navratilova for the tennis school?

$739,888.13
$1,000,000.00
$1,739,888.13
$1,999,999.00

Expert Solution

jeff jeffy answered 1 year ago

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Your sister Steffi recently purchased a new car that cost $40,000. She paid 5% of the...

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