You are buying a car for $25,000. You will put no money down and get a...

You are buying a car for $25,000. You will put no money down and get a loan for the full purchase price. The bank offers you the following loan terms: APR 8% (Annual percentage rate), 3 year loan with quarterly payments.

Create an amortization schedule paying off the loan.

Solutions

Expert Solution

Compute the quarterly interest rate, using the equation as shown below:

Quarterly rate = Annual rate/ 4

= 8%/ 4

= 2%

Hence, the quarterly rate is 2%.

Compute the present value annuity factor (PVIFA), using the equation as shown below:

PVIFA = {1 – (1 + Rate)-Number of periods}/ Rate

= {1 – (1 + 0.02)-12}/ 2%

= 10.5753412204

Hence, the present value annuity factor is 10.5753412204.

Compute the quarterly loan payment, using the equation as shown below:

Quarterly loan = Loan amount/ PVIFA

= $25,000/ 10.5753412204

= $2,363.98991568

Hence, the quarterly loan payment is $2,363.98991568.

Prepare the amortization table, using MS-excel as shown below:

The result of the above excel table is as follows:

Hence, the above-mentioned is the amortization table of the loan.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

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.

You want to buy a new car for $25,000. You put $2000 down and are given...

You want to buy a new car for $25,000. You put $2000 down and are given $2000 as trade-in for your current car. You take out a loan for the remaining $21,000. The terms of the loan are an annual interest rate of 4.8% compounded monthly. You are to make 60 equal monthly payments (end of month) to pay off the loan. how can i get the answer using excel

Suppose you are buying an $80,000 car , you decide to buy it and get it...

Suppose you are buying an $80,000 car , you decide to buy it and get it financed and make monthly payments.Your budget is $3,000 for monthly payments, and you can get financing at 11% APR. With the help of an amortization table, show approximately how long will it take you to pay the loan back? Remember the monthly payment must be around your budget. Work with Excel. Copy and paste the first four months and last two months of the...

You are considering buying a new car. The sticker price is $85,000 and you have $25,000...

You are considering buying a new car. The sticker price is $85,000 and you have $25,000 to put toward a down payment. If you can negotiate a nominal annual interest rate of 6.5 percent and you wish to pay for the car over a 5 year period, what are your monthly car payments? DO NOT USE EXCEL

A car dealership offers you no money down on a new car. You may pay for...

A car dealership offers you no money down on a new car. You may pay for the car for 5 years by equal monthly end-of-the-month payments of $407 each, with the first payment to be made one month from today. If the discount annual rate is 4.52 percent compounded monthly, what is the present value of the car payments? Round the answer to two decimal places.

1. You are considering buying a new car. Price is $23,000 and you will pay down...

1. You are considering buying a new car. Price is $23,000 and you will pay down payment of $3000. If you plan to incase the car over a 50 month period at a nominal interest of 12% what would be you monthly payment? A. $ 613.25 B. $ 510.25 C. $ 480. 65 D. $ 620.50 2. The conflict of interest exists between stockholders and creditors in a corporation because stockholders may A. Increase the firms investment risk level B....

Suppose you purchase a new car today for $25,000. You pay $2,000 as down payment towards...

Suppose you purchase a new car today for $25,000. You pay $2,000 as down payment towards this purchase, and finance the balance over 5 years at an annual interest rate of 5%, the first payment to be made in one month. Payments are made every month over the next 5 years. Calculate the monthly payment using both formula and function method. (Hint: need to multiply time by 12 to find the number of months and need to divide interest rate...

You are considering buying a new car, because you think it will save you money. Your...

You are considering buying a new car, because you think it will save you money. Your think your old car will cost $2,200 in gas and maintenance next year (Year 1), and you expect that to increase by 6% every year until the end of Year 10. A new car will cost you $16,500 now (Year 0). You think it will cost $500 in gas and maintenance next year (Year 1), and you expect that to increase by 4% every...

A long strangle is created by buying a slightly out of the money put and a...

A long strangle is created by buying a slightly out of the money put and a slightly out of the money call with the same expiration date. The market price of MSFT is $184.00. The June 5 $195.00 calls have a premium of $1.70 The June 5 $175.00 calls have a premium of $3.70 a) What is the most an investor can lose on this position? b) What does the price of MSFT need to be for the investor to...

Subjects