| 
  • If you are citizen of an European Union member nation, you may not use this service unless you are at least 16 years old.

  • You already know Dokkio is an AI-powered assistant to organize & manage your digital files & messages. Very soon, Dokkio will support Outlook as well as One Drive. Check it out today!

View
 

PFProb1

Page history last edited by PBworks 17 years, 8 months ago

Learning Objectives

 

Problem 1 of 3

 

Emily wishes to obtain a new car with a total price of $18 752.

 

Option 1: Purchase the car now with a down payment of $4000 and a loan at 2% per annum compounded monthly and paid monthly for 3 years.

Option 2: Lease the car with no down payment and pay $325 per month for 3 years and then purchase the car outright at its lease-end value of $8000.

 

(a) What is the monthly payment for Option 1?

 

(b) What is the total paid in Option 2?

 

(c) Which option will cost Emily the least amount and by how much?

 

 

Solution

 

 

A= P(1+i)^t

 

--p= principal. amount to begin with.

--A= amount paid at the end.

--t= time in years

 

Option 1 a) =18 752(1+.02)^3

=18 752(1.02)^3

=$56821.15*$4000.00

=$19899.77+$4000.00

=$23899.77

option one montly pay=$19899.77/36

=$552.77

 

 

 

Option 2 b) 325*36=$11700.00+8000 12*3=36

=$19700.00

 

          • Option 2 will cost Emily the least amount. by: $23899.77-19700.00

=$4199.77

 

Next Problem

Home

Personal Finanace

Comments (0)

You don't have permission to comment on this page.