1. Present Value
You are looking to buy a car. You can afford $390 in monthly payments for four years. In addition to the loan, you can make a $1,600 down payment. If interest rates are 8.50 percent APR, what price of car can you afford (loan plus down payment)? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
present value = ?
2. Loan Payments
You wish to buy a $27,500 car. The dealer offers you a 6-year loan with a 7.2 percent APR. What are the monthly payments? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
payment ...... pre month
How would the payment differ if you paid interest only? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
payment ...... pre month
3. Number of Annuity Payments
Joey realizes that he has charged too much on his credit card and has racked up $5,100 in debt. If he can pay $125 each month and the card charges 18 percent APR (compounded monthly), how long will it take him to pay off the debt? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
time to pay off the debt = ? months
4. Investing for Retirement
Monica has decided that she wants to build enough retirement wealth that, if invested at 8 percent per year, will provide her with $4,400 of monthly income for 20 years. To date, she has saved nothing, but she still has 25 years until she retires.
contribution per month = ?
How much money does she need to contribute per month to reach her goal? First compute how much money she will need at retirement, then compute the monthly contribution to reach that goal. (Do not round intermediate calculations and round your final answer to 2 decimal places.)