F301
Problem Set Two
Spring 2011
Please show your work in a professional, businesslike fashion. It should be neither crowded nor
illegibly tiny. Make this assignment look like something you could present to your boss.
Show your work in the form requested in the problem: either calculations and equations, or calculator
inputs with the TVM keys. No credit will be given without complete work.
Each part of each problem is worth three points. Total possible points = 33.
1.
You have decided to buy a car with the $10,000 gift you just received from your grandmother. That early
Porsche Cayman will cost you $28,000. With your $10,000 cash as your down payment, you will need to
borrow $18,000. Suppose this car loan is for four years, with a quoted interest rate of 9% compounded
monthly. What will be the amount of your monthly payment?
2.
A bank is offering an amortized loan in the amount of $5,000 for 12 months, with a monthly payment
of $432.27.
a.
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 Spring '12
 T
 Interest, Net Present Value

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