Chapter 7 Solution Set

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

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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
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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.

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

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