annuity formula is
PMT = PV*(r/n)/(1 - (1+r/n)^(-n*t))
For option A
PMT = 32000*(0.0663/12)/(1 - (1+0.0663/12)^(-5*12)) = $628.07
For option B,
PMT = 13000*(0.0556/12)/(1 - (1+0.0556/12)^(-5*12)) = $248.68
difference between monthly payment = 628.07-248.68 = $379.39
14 of 20 (12 complete) HV. Score: 0 of 1 pt 8.6.5 Suppose that you are...
.6.5 Suppose that you are thinking about buying a car and have narrowed down your choices to two options. The new-car option: The new car costs $31,000 and can be financed with a three-year loan at 7.63%. The used-car option: A three-year old model of the same car costs $14,000 and can be financed with a four-year loan at 7.25%. What is the difference in monthly payments between financing the new car and financing the used car? Use PMT=- -nt...
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Homework: Homework 4D - Loan Payments, Credit Cards, Mortga Save Score: 0 of 1 pt 7 of 10 (7 complete) HW Score: 55%, 5.5 of 10 pts 4.D.27 Question Help Someone needs to borrow $11,000 to buy a car and the person has determined that monthly payments of $250 are affordable. The bank offers a 3-year loan at 7% APR, a 4-year loan at 7.5%, or a 5-year loan at 8% APR. Which loan best meets the person's needs? Explain....