Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Judy has just received $14,676 as an inheritance from her uncle and is considering ways to use the money. Judy's car is one year old,

Judy has just received $14,676 as an inheritance from her uncle and is considering ways to use the money. Judy's car is one year old, and her monthly payment is $351.She owes 48 more payments. The amount to pay off the loan is $14,640. Judy will save $2,208 in interest if she pays off her car loan now. Judy is also considering investing the $14,676 in a certificate of deposit (CD). She is guaranteed a return of 3% on a four-year CD. How much would Judy earn from the CD? Which of the two alternatives offers the better return?

(Note: Ignore any tax effect.) (Hint: you need to compute the interest rate on Judy's loan.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Corporate Financial Management

Authors: Douglas R. Emery, John D. Finnerty, John D. Stowe

4th Edition

1935938002, 9781935938002

More Books

Students also viewed these Finance questions