FP5eQCh6 - Problems with Guided Answers by Michelle Cull...

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Financial Planning in Australia 5e Problems Ch6 Page 1 Problems with Guided Answers by Michelle Cull © 2013 Reed International Books Australia Pty Limited trading as LexisNexis. Permission to download and make copies for classroom use is granted. Reproducing or distributing any material from this website for any other purpose requires written permission from the Publisher. CHAPTER 6: Securing and Managing Credit 1 Leanne works part-time, earning about $26,000 a year. She pays her parents $50 per week board and spends approximately $100 per week in addition to $40 for public transport. The rest she has been putting away to buy a car. She has $6,000 saved. Leanne is considering borrowing to buy a used car so that getting to school and then to work is easier. She has found a car for $16,000 that would meet her needs. Leanne can get a personal loan for the $10,000 she needs at 9% interest for four years. Leanne thinks that she will need $40 a week for petrol. a Calculate the loan repayments for Leanne — can she afford this loan? b How much interest will be paid on the loan over the four years? c List some additional costs that Leanne would need to factor in to her budget now that she has her own car. a If Leanne buys the car, she will save $40 on public transport but she will need this $40 for petrol if she buys the car. Her loan will be $10,000 at 9% for four years — monthly repayments as calculated below. Loan calculation: PV = 10,000 C = ? i = 0.09/12 = 0.0075
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