HW _3 Fall 2010

# HW _3 Fall 2010 - Homework#3 Opens Sept 16th at 3pm Closes...

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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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HW _3 Fall 2010 - Homework#3 Opens Sept 16th at 3pm Closes...

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