Show all work: He Purchased a 1998 mini-van $11,000 from a bank which required he make...
Show all work:
He Purchased a 1998 mini-van $11,000 from a bank which required he make a down payment of $2500 at a 3% annual interest rate. He paid for the vehicle once a month each month, paid $250 dollars each year in maintenance costs, and paid the car off in 5 years.
a) How much did Jim pay the bank each year?
b) How much did Jim pay in total for his mini-van?
c) Create a cash flow diagram that represents Jim’s purchase.
Homework Answers
a: Using financial calculator
Input: PV = 11000-2500 = -8500
I/Y = 3/12 = 0.25
N = 5*12 = 60
Solve for PMT as 152.73
b: Total payment for the van = 152.73*60 + 250*5 = 10413.80
c:
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