Problem 1 Background information: Car purchase cost: $30,000 Sum of Fuel and Maintenance Cost at End of Year 1: $2,500 Incremental increase in Fuel and Maintenance Cost after Year 1: $300/year (i.e. Fuel and Maintenance Cost at End of Year 2 is $2,750, End of Year 3 is $3,000, and so on). (a). (1 pt.) Suppose that you can get a car loan at 6.9% annual, compounded monthly, for a term of 60 months. You put down $5,000 and you finance the remaining $25,000. What is the monthly payment ($/month)? (b). (1 pt.) Suppose that the dealer asks you how much you are willing to pay per month. You say you're willing to pay $440 per month. The dealer says, great! We can do that! And quotes you the following loan: $438.33 per month for 72 months. How much are you going to pay in interest for this loan ($)? (c). (1 pt.) What is the present worth of the fuel and maintenance costs ($) if we assume an effective annual interest rate of 7.1 percent, compounded annually? Base your calculation on a lifetime of 10 years. Problem 1 Background information: Car purchase cost: $30,000 Sum of Fuel and Maintenance Cost at End of Year 1: $2,500 Incremental increase in Fuel and Maintenance Cost after Year 1: $300/year (i.e. Fuel and Maintenance Cost at End of Year 2 is $2,750, End of Year 3 is $3,000, and so on). (a). (1 pt.) Suppose that you can get a car loan at 6.9% annual, compounded monthly, for a term of 60 months. You put down $5,000 and you finance the remaining $25,000. What is the monthly payment ($/month)? (b). (1 pt.) Suppose that the dealer asks you how much you are willing to pay per month. You say you're willing to pay $440 per month. The dealer says, great! We can do that! And quotes you the following loan: $438.33 per month for 72 months. How much are you going to pay in interest for this loan ($)? (c). (1 pt.) What is the present worth of the fuel and maintenance costs ($) if we assume an effective annual interest rate of 7.1 percent, compounded annually? Base your calculation on a lifetime of 10 years