Jacob wishes to purchase a new car, in 6 years time,which currently sells for $63000. He has found an account paying 4.4% p.a. compounded monthly.

a.

Use the graphics calculator to calculate the amount Jacob needs to deposit into his account each month

Calculator input:

n=n=

Answer

i=i=

Answer

PV=PV=

Answer

PMT=PMT=

Answer

FV=FV=

Answer

P/Y=P/Y=

Answer

C/Y=C/Y=

Answer

Therefore, Jacob needs to put $ Answer into this account every month.

b.

Inflation is currently running at 2.5% pa. What would be the expected price of the car due to inflation in 6 years time?

Inflation =

$ Answer

c.

What should Jacob pay into his account to save for the expected price of the car due to inflation?

n=n=

Answer

i=i=

Answer

PV=PV=

Answer

PMT=PMT=

Answer

FV=FV=

Answer

P/Y=P/Y=

Answer

C/Y=C/Y=

Answer

Therefore, Jacob needs to put $ Answer into this account every month.

Jacob's situation has changed and needs a car immediately. He will take out a loan from a bank with an interest rate of 12.6%p.a., compounded monthly over 7 years

d.

Jacob has saved $6000 for the car. How much money will he need to borrow from the bank?

Amount borrowed =

$ Answer

e.

What will Jacob's monthly repayments be?

Monthly Repayments =

$ Answer

After one year, Jacob has a pay rise and can now afford to increase his monthly repayments to $1200, but the interest rate has also increased to 14.2%p.a. compounding monthly.

f.

How much is the outstanding debt after 12 months?

The outstanding debt is

$ Answer

g.

How long (in months) will it take for Jacob to pay his outstanding debt, by making monthly repayments of $1200 with an interest rate of 14.2%p.a. compounding monthly?

Number of months to pay off the debt=

$ Answer