She has negotiated a sales price of $36,585, and she has a $5,000 down payment. She is eligible for the entire $10,000 cash rebate. Her bank has pre-approved her for a 72 -month car loan at 3.24\%. Assuming Alejandra wants the lowest overall price, which option should she take? Should she take the 0% financing offer for 66 months from the dealer, or should she borrow the money from her bank at 3.24% to pay off the dealer and receive \& the $10,000 cash rebate? (show your work) Now suppose she can only get $2,000 cashback (with the 3.24% financing from her bank). Does this change her decision? (show your work) c. Suppose Alejandra can arrange to finance for 8.69% instead of 3.24%. The cash rebate remains at $10,000. Does this change her decision? (show your work) 2. Vivian wants to buy a house. The house she wants is listed for $300,000, and she wants to avoid PMI insurance. She can get a fixed-rate mortgage at 4.25% for 30 years. Don't worry about taxes and insurance for any of these questions. Just keep in mind that those would need to be considered as well. a. What down payment will she need? (show your work) b. If Vivian makes her down payment and takes out the loan described, what will be her monthly payment? c. If Vivian makes her down payment and takes out the loan described, what will be the total cost of the house? (show your work) e. What if Vivian can only pay a 10% down payment? What would her first monthly payment be for the 30 -year mortgage at 4.25% ? (For this example, the PMI insurance cost is 1% of the loan amount per year.) She has negotiated a sales price of $36,585, and she has a $5,000 down payment. She is eligible for the entire $10,000 cash rebate. Her bank has pre-approved her for a 72 -month car loan at 3.24\%. Assuming Alejandra wants the lowest overall price, which option should she take? Should she take the 0% financing offer for 66 months from the dealer, or should she borrow the money from her bank at 3.24% to pay off the dealer and receive \& the $10,000 cash rebate? (show your work) Now suppose she can only get $2,000 cashback (with the 3.24% financing from her bank). Does this change her decision? (show your work) c. Suppose Alejandra can arrange to finance for 8.69% instead of 3.24%. The cash rebate remains at $10,000. Does this change her decision? (show your work) 2. Vivian wants to buy a house. The house she wants is listed for $300,000, and she wants to avoid PMI insurance. She can get a fixed-rate mortgage at 4.25% for 30 years. Don't worry about taxes and insurance for any of these questions. Just keep in mind that those would need to be considered as well. a. What down payment will she need? (show your work) b. If Vivian makes her down payment and takes out the loan described, what will be her monthly payment? c. If Vivian makes her down payment and takes out the loan described, what will be the total cost of the house? (show your work) e. What if Vivian can only pay a 10% down payment? What would her first monthly payment be for the 30 -year mortgage at 4.25% ? (For this example, the PMI insurance cost is 1% of the loan amount per year.)
