i need help with parts 5-7 please - Prof, Business decides to buy a 2022 Honda CR-V Touring edition. After paying a down payment and

Question

76 users unlocked this solution today!

i need help with parts 5-7 please

- Prof, Business decides to buy a 2022 Honda CR-V Touring edition. After paying a down payment and taxes, Prof. Business can finance the rest of the purchase price with a loan of $22,000 for 48 months at a special finance rate offered by Honda of 2.9% APR compounded monthly. - Prof, Business finds out that Honda has a second offer of $1000 cash back (which will be used as an additional down payment) in place of the special 2.9% finance rate offered. Prof. Business can get 4.29% APR financing online for 48 months with the $1000 cash back offer. Answer the following questions. 1. What is the effective annual rate for each loan? 2. What would be the monthly car loan payment under the Honda's 2.9% APR financing offer (assume a 48-month loan term)? 3. What would be the monthly car loan payment under the $1000 cash back offer and the 4.29% APR pre-approved financing (assume a 48-month loan term)? 4. At what APR would Prof. Business be indifferent between the two offers? In other words, what APR (assuming a 48 -month loan term) for the $1000 cash back offer would have the same monthly payment with the 2.9% APR financing offer? 5. Let's assume you go with the offer in question #3. Construct an amortization schedule for the loan for all 48 monthly payments (see section 5-18 of the textbook). What is your loan balance after 36 months? 6. The local Honda dealer has found a special 3.19% APR loan rate for 48 months from Citibank that Prof. Business qualifies for if he elects the $1000 cash back option. Finance says that's great! What would be the monthly payment under this loan? 7. Prof. Business is more than happy with the 3.19% APR and $1000 cash back offer but wants a monthly payment of $425 (assume a 48-month loan term) and realizes he will have to put more money down. How much additional money will Prof. Finance have to put down in order to achieve his target monthly payment? Note: original loan. amount with cash back was $21,000