1. You have purchased a home computer with the latest technology for $3,290.00 (
ID: 2616112 • Letter: 1
Question
1. You have purchased a home computer with the latest technology for $3,290.00 (including tax). The store is financing your purchase with a three year loan with monthly payments of $109.28.
a. What is the total paid on this loan? b. How much interest will you have paid?
2. Samantha received a $1,500.00 bonus. She decided to deposit the money in a savings account earning 3% APR compounded annually. What is the value of her bonus (bonus plus all interest) after 5 years?
3. Gabby is purchasing a new Toyota Prius for $28,730.00. She will put $2,873.00 down and finance the remainder. She has been preapproved by her credit union for a five year loan charging 3.8% APR compounded monthly. a. Determine the monthly payment. b. The dealer is offering to finance the remainder at 3.6% APR compounded monthly over six years. Determine the monthly payment. c. Which plan saves her money over the long run?
Explanation / Answer
1.a. Total paid on this loan=109.28*3*12 = $3,934.08
1,b Interest amount = 3,934.08-3,290 = $644.08
2.Value of bonus after 5 years = PV*(1+r)^n = 1500*(1+0.03)^5 = 1,738.91
3. Value of car = 28,730. Down payment = 2,873
Reminder = 28,730-2,873 = 25,857
Monthly rate = 0.038/12, PV =25,857 and nper = 5 years = 60 months
3.a Monthly payment = PMT(rate,nper,pmt) =PMT(0.038/12,60,25857) = 473.87
3.b. Dealer option , monthlt payment =PMT(0.036/12,72,25857) = 399.84
3.c. Total in option (a) = 473.87*60 = 28,432.20
Total in option (b) = 399.84*72 = 28,788.48
Plan (a) Credit union saves her money in the long run since total payment is lower in that option
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