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Homework #3
Opens:
Sept 16
th
at 3pm
Closes:
Sunday Sept 19
th
at 11:55pm
1.
You just agreed to a store loan for the purchase of a new plasma TV. You agreed to a loan amount of
$2,200, an annual interest rate of 14.2%, and a term of 40 months. The competitive price for the TV
is CP=$1870 and the competitive borrowing rate for you right now is 8.1%. By how much will you
be overpaying (compared to a competitive deal) each month when you pay off your loan over 40
months?
Note: when calculating the answer for this problem, I enter interest as #/12 and then immediately hit [ I ].
a.
$10.41
b.
$15.86
c.
$9.44
d.
$15.40
e.
$6.42
2.
Suppose that you purchase a new car and you agree to a loan with: loan amount = $19,700, interest
rate = 8.3%, term = 60 months. If the competitive price of the car is $17,400 and your competitive
loan rate is 5.6%, then to the nearest dollar, how much or your wealth or value are you destroying
with this deal?
Note: when calculating the answer for this problem, I enter interest as #/12 and then immediately hit
[ I ].
a.
$2,300
b.
$1,310
c.
$2,991
d.
$3,610
e.
$3,863
3.
Two loans that you could
use to fully pay for a car (and receive no money back)
have the same
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 Spring '10
 Tom
 Interest, Interest Rate

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