Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Dave Krug finances a new automobile by paying $6,700 cash and agreeing to make 10 monthly payments of $580 each, the first payment to be
Dave Krug finances a new automobile by paying $6,700 cash and agreeing to make 10 monthly payments of $580 each, the first payment to be made one month after the purchase. The loan bears interest at an annual rate of 12%. What is the cost of the automobile? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Monthly Payment Table Factor Present Value of Loan Table Values are Based on: n = Present Value of Loan Cash Down Payment Cost of the Automobile C&H Ski Club recently borrowed money and agreed to pay it back with a series of six annual payments of $24,000 each. C&H subsequently borrows more money and agrees to pay it back with a series of four annual payments of $21,000 each. The annual interest rate for both loans is 6%. Find the present value of these two separate annuities. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to nearest whole dollar. Round "Table Factor" to 4 decimal places.) Number of Periods X Table Factor Interest Rate 6% First Annuity Single Future Payment $ 24,000 24,000 x Amount Borrowed 1 2 6% First payment Second payment Third payment Fourth payment 3 6% 24,000 x 0 4 6% 24,000 x 0 Fifth payment 5 6% 24,000 x 0 Sixth payment 6 6% 24,000 0 $ 0 Number of Periods X Table Factor Second Annuity Interest Single Future Rate Payment 6% $ 21,000 x 6% 21,000 x Amount Borrowed 1 2 = First payment Second payment Third payment Fourth payment 3 6% 0 21,000 x 21,000 x 4 6% 0 $ 0 Compute the amount that can be borrowed under each of the following circumstances: (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your "Table value" to 4 decimal places.) 1. A promise to repay $96,000 ten years from now at an interest rate of 9%. 2. An agreement to make three separate annual payments of $11,000, with the first payment occurring 1 year from now. The annual interest rate is 5%. Option 1 Table Value Amount Present Value Loan amount $ 0 Option 2 Table Value Amount Present Value Annual payments 0
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started