Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
1) Carmen Hernández has saved $ 8,000 for a car deposit
1) Carmen Hernández has saved $ 8,000 for a car deposit. The highest monthly payment she can afford is $ 455. The loan will have an APR of 11% due at the end of each month. Determine what is the most expensive car you can buy if you buy it on credit payable in 60 months.
2) Determine the present value of a financial instrument that pays $ 18,500 in 10 years if similar risk instruments pay 6% per year.
3) Calculate the future value (FV) of a $ 5,000 investment at an interest rate of 10% over 7 years.
4) Determine the interest rate you will pay, if you are approved for a loan for $ 112,000 with annual payments of $ 15,000 over 8 years.
Expert Solution
1) We can calculate the present value by using the following formula in excel:-
=-pv(rate,nper,pmt,fv)
Here,
PV = Present value
Rate = 11%/12 = 0.9167% (monthly)
Nper = 60 periods (monthly)
Pmt = $455
FV = $0
Substituting the values in formula:
= -pv(0.9167%,60,455,0)
= $20,926.83
Maximum price = Present value + Down payment
= $20,926.83 + $8,000
= $28,926.83
2) Computation of the present value:-
FV = PV*(1+rate)^n
$18,500 = PV*(1+6%)^10
PV = $18,500 / 1.7908
= $10,330.30
3) Computation of the present value:-
FV = PV*(1+rate)^n
= $5,000*(1+10%)^7
= $5,000*1.9487
= $9,743.59
4) We can calculate the interest rate by using the following formula in excel:-
=rate(nper,pmt,-pv,fv)
Here,
Rate = Interest rate
Nper = 8 periods
Pmt = $15,000
PV = $112,000
FV = $0
Substituting the values in formula:
= rate(8,15000,-112000,0)
= 1.56%
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
