Chapter 7 Solution Set

# Chapter 7 Solution Set - Chapter 7 Solutions 1) a. The...

This preview shows pages 1–2. Sign up to view the full content.

Chapter 7 Solutions 1) a. The monthly payment for \$2,800 at 16 percent for 4 years would be \$79.35 PVA = CF[{1 – 1/(1+r)^t}/r] \$2,800 = CF [{1 – 1/(1+(.16/12))^4(12)}/(.16/12)] therefore CF = \$2,800 / 35.28546 = \$79.35 b. Total finance charges are = [(\$79.35 x 48) – \$2,800] = \$1,008.80 . c. The monthly payment for \$2,800 at 16 percent for 3 years would be \$98.45 \$2,800 = CF [{1 – 1/(1+(.16/12))^3(12)}/(.16/12)] therefore CF = \$2,800 / 28.44381 = \$98.44 an increase of \$19.09 per month compared to the four-year loan. d. Total finance charges are = [(\$98.44 x 36) – \$2,800] = \$743.84 over 3 years, a decrease of \$264.96 compared to the 4-year loan. e. The monthly payment for \$2,300 at 16 percent for 4 years would be \$65.18 \$2,300 = CF [{1 – 1/(1+(.16/12))^4(12)}/(.16/12)] therefore CF = \$2,300 / 35.28546 = \$65.18 a decrease of \$14.17 compared to the \$2,800 four-year loan. f. Total finance charges over 4 years are = [(\$65.18 x 48) – \$2,300] = \$828.64 with the \$500 down payment. g. The monthly payment for \$2,300 at 16 percent for 3 years would be

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 08/27/2008 for the course FIN 200 taught by Professor Delcorral during the Spring '08 term at Loyola New Orleans.

### Page1 / 2

Chapter 7 Solution Set - Chapter 7 Solutions 1) a. The...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online