Jody is planning to buy a car for $20,000, putting 20% down in cash, with the...

Jody is planning to buy a car for $20,000, putting 20% down in cash, with the rest going towards a loan. The bank tells her that the interest rate on the loan will be 8% per year, which is then compounded monthly, for a three-year loan. What is Jody’s monthly payment going to be?

Solutions

Expert Solution

Loan Amount = Purchase Price * (1 - Downpayment)

= $20,000 * (1 - 0.20) = $16,000

Monthly Payment = [Loan Amount * r] / [1 - (1 + r)^-n]

= [$16,000 * (0.08/12)] / [1 - {1 + (0.08/12)}^-(3*12)]

= $106.67 / 0.2127

= $501.38

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Ms. Towne is buying a home for $350,000 and is putting down 20% cash on the...

Ms. Towne is buying a home for $350,000 and is putting down 20% cash on the purchase. She is financing the rest with a 25 year fixed rate 5.75% mortgage, but is considering a bi-weekly repayment option. How much interest would the bi-weekly option allow her to save and how long would it take her to pay off the loan with this option? a) $45,763; 21.8 years b) $44,330; 21.14 years c) $49,321; 13.27 years d) $37,901; 22.23 years

Two years ago, you purchased a $20,000 car, putting $4,000 down and borrowing the rest. Your...

Two years ago, you purchased a $20,000 car, putting $4,000 down and borrowing the rest. Your loan was a 36-month fixed rate loan at a stated rate of 7.0% per year. You paid a non-refundable application fee of $100 at that time in cash. Interest rates have fallen during the last two years and a new bank now offers to refinance your car by lending you the balance due at a stated rate of 5.5% per year. You will use...

Adrian wants to buy a house for $206,700. He is planning on making a 20% down...

Adrian wants to buy a house for $206,700. He is planning on making a 20% down payment, and closing costs will amount to $3,180. Annual property taxes are $4,890, and homeowners insurance is $816 per year. How much money will he need up front?

You are planning to buy a house in New Jersey. You put a 20% down payment,...

You are planning to buy a house in New Jersey. You put a 20% down payment, and 15-year mortgage rates are at 4.2% -Price of the house is $400,000. a. Calculate the monthly payments. b- Calculate the 1st month interest payment. c-Calculate the 1st month principal payments

You are planning to buy a house in New Jersey. You put a 20% down payment,...

You are planning to buy a house in New Jersey. You put a 20% down payment, and 15-year mortgage rates are at 4.2% -Price of the house is $400,000. A. Calculate the 1st month interest payments B.Calculate the 1st month principal payments C. Calculate the monthly payments. Place answer in the box below and use 2 decimals and no $ sign

You are planning to buy a house. Assume that you have the cash to pay 20%...

You are planning to buy a house. Assume that you have the cash to pay 20% down payment on any home that your $2,400/month maximum payment can afford including taxes and insurance (no PMI required). A lender offers you a 30 year fixed mortgage for the remaining 80% with 4.5% APR with 1.5 points and $2,000 in fees. Property taxes are $3,600 and Casualty Insurance is $1,200. How expensive of a home can you purchase today? Using the data from...

You are planning to buy a car. The retail price of the car is $40,000. Fox...

You are planning to buy a car. The retail price of the car is $40,000. Fox Auto is making you the following offer: You pay $4,000 down and then $1,000 a month for next 36 months (3 years). The APR is 4.8 percent (compounded monthly). This offer is equivalent to a $[___] off the retail price (when paid in cash today). Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a $2,534...

You are planning to buy a new car. The cost of the car is $50,000. You...

You are planning to buy a new car. The cost of the car is $50,000. You have been offered two payment plans: • A 10 percent discount on the sales price of the car, followed by 60 monthly payments financed at 9 percent per year. • No discount on the sales price of the car, followed by 60 monthly payments financed at 2 percent per year. If you believe your annual cost of capital is 9 percent, which payment plan...

You are saving money to buy a Car. You will need $20,000 as the price of...

You are saving money to buy a Car. You will need $20,000 as the price of the car today. If you can make a down payment now of $8000 , and want to pay the rest by installments, A. how much each deposit per month should be if you want to pay the rest of the amount in 24 months if the interest rate on the deposit is 6% per year? B. If you can deposit $664 per month how...

Suppose that you can buy a car now for $20,000. On the otherhand, you can...

Suppose that you can buy a car now for $20,000. On the other hand, you can lease it at $350 per month for 60 months. If you buy a car now, then you will be able to sell it at the end of the fifth year for $8,000. If you choose to lease, what is the monthly and annual IRR of the lease compared to the buying a car now?

Subjects