The solution is already provided, I just need help with the sections marked in G
ID: 2789745 • Letter: T
Question
The solution is already provided, I just need help with the sections marked in Grey. You are buying a car and have settled on a purchase price of $33,560 (the current average new car price) and a trade-in value for your current car of $2500. You agree to a down payment of $1000 and they offer you 4 years financing with monthly payments of $775. Calculate the effective annual interest rate you are being charged. It's too much-so you try and leave, they offer you special financing of 6%, what is the new payment? Still uneasy about coming up with that much money every week. They tell you it is a great and reliable car and offer you 5 years financing instead of 4. What is the payment now? You really can't afford more than $500 payment-under these latest financing terms what is the maximum amount you can finance? 1 Assignment 8 ENGR 3315 Fall 2017 Submitted by: Lee Hinkle (key) 2 3 $33,560.00 Car Price -$2,500.00 Trade-In for current car 5 1,000.00 Down Payment $30,060.00 Amount Financed 7 $775.00 Monthly Payment 4 Years Financed 11.43% Effective Annual Interest Rate 10 6% New Interest Rate $705.96 New Payment Amount 12 13 14 15 16 17 Same terms, but need $500 payment, how much can you finance? 18 $25,862.78 19 20 21 Numbers in white are to be entered 22 Numbers in grey are calculated 5 New Number Years Financed@ New Rate $581.14 New Payment Amount Car Financing Circuit Board Cost | RetirementExplanation / Answer
Amount Financed = Car Price - Trade In for Current Car - Down payment = A3 - A4 - A5
Effective Annual Interest Rate
Rate (nper,pmt, pv) = Rate(4*12, -775, 30060) = 0.91%
Annual Interest rate = 0.91% * 12 = 10.87%
EAR = (1+ 10.87%/12)^12 - 1 = 11.43%
New Payment Amount with 6% rate= PMT ( rate,nper,PV) = PV(6%/12,4*12,30060) = $ 705.96 (as it is monthly payment rate is per month and nper is number of months)
New Payment amount with 5 years = PMT(6%/12, 5*12, 30060) =$ 581.14
PMT = 500, So Loan = PV( rate,nper,pmt) = PV(6%/12,5*12,-500) = $ 25,862.78