2. Suppose you can afford payments of $150 a month for a car loan. Most car loans are for 5 years; assume the APR is 4 3/4%. Determine what price car you can afford (principal), your total payments over the term of the loan, and the amount of interest paid over the loan term.

3. a. You want to buy a new car. You can only afford monthly payments of $100. If you want to have your car paid off in 3 years, how much can you afford to borrow (principal) if you can find a loan that has an interest rate of 5 % compounded monthly?

b. What if you want to pay it off in 5 years?

c. What is the difference in the price of the car that you could buy?

d. What if you could afford $200 dollars a month for 3 years?

e. What if you could afford $200 dollars a month for 5 years?

f. What option would you choose and why?

4. You bought a car for $32,600. The dealer arranges a loan with an APR of 6.7% compounded monthly, and says you will only have to pay $385 per month. How long will it take to pay off the loan? (Round to the nearest tenth)

5. Suppose you have a credit card debt of $4000 with an annual interest rate of 24%. You decide to pay off your balance over a 3 year period.

a.) How much will you need to pay each month assuming you make no further purchases?

b.) How much interest have you paid?

c. Suppose you can afford monthly payments of$200. Write what you will put in the calculator.

d.) How long will it take you to pay off your credit card?

e.) How much total have you paid?

f.) How much interest have you paid?

6. Other Than Monthly Payments. Suppose you want to borrow $100,000 and you find a bank offering a 20-year term for a loan of that amount, with an APR of 6%.

a. Find your regular payments if you make them yearly, monthly, biweekly (every 2 weeks), or weekly, that is, for n = 1, 12, 26, 52.

b. Compute the total payment for each case in part (a).

c. Compare the total payments computed in part (b).

d. Discuss the pros and cons of the payment plans.

7. Assume you have a balance of $1200 on a credit card with an APR of 18%, or 1.5% per month. You start making monthly payments of $200, but at the same time you charge an additional $75 per month to the credit card. Assume that interest for a given month is based on the balance for the previous month. The following table shows how you can calculate your monthly balance. Complete and extend the table to show your balance at the end of each month until the debt is paid off. How long does it take to pay off the credit card debt? 8. The following table shows the expenses and payments for 8 months on a credit card account with an initial balance of $300. Assume that the interest rate is 1.5% per month (18\% APR) and that interest for a given month is charged on the balance from the previous month. Complete the table. After 8 months, what is the balance on the credit card? Comment on the effect of the interest and the initial balance, in light of the fact that for 7 of the 8 months expenses never exceeded payments