You are considering purchasing a car with a sticker price of $27,000 (nonnegotiable with no down payment required). You wish to make monthly payments for five years and the most you can afford to pay is $500 a month. The credit union has agreed to loan you the money at a 2.49% annual interest rate.
Answer the following three questions
a) What is your monthly payment and can you afford to purchase the car?
b) Instead of making the regular payment that you solved for in part a, if you make monthly payments of $500 how soon will you be able to pay off the car or will you be paying less than your monthly required payment?
c) Instead of taking out a five year loan, you take out a six year loan under the same terms. What is your monthly payment and compared to the five year loan, how much more interest are you charged over the life of the six year loan assuming that you use the required payments (i.e., not the $500 payments) for each scenario?
In order to solve parts a-c you are required to create two loan amortization spreadsheets.