SOLVE 1 TO 3 (SHOW SOLUTION)

PLEASE WHEN ANSWERING IN WRITTEN FORM MAKE IT CLEAR AND UNDERSTANDABLE

1. The two largest purchases you will likely make in your lifetime are a vehicle and a homeTo Buy or To Lease,That is the Question.

When you are ready to have your own vehicle (we will refer to it as a car for the sake of simplicity), you have two options:

• Purchase a car from a dealership or a private owner
• Lease a car from a dealership

When purchasing a car, there is choice in how frequently the payment is made, what time of month and how the bank chooses to compound the interest rate. Often buyers choose a monthly or biweekly payment and banks compound the interest frequently (monthly or daily).

Therefore, the monthly car payments often form aGeneral Ordinary Annuity.

Consider this situation: You have saved $4,109 toward down payment fora new car. You've chosen a 2016 Honda Accord Coupe for $25,888 plus tax.

Find the price of the car with tax @ 12% minus the down payment.Round your answer to two (2) decimal places. Do not enter the dollar sign. Sample input: 24562.23

2.Interest rates are 11.2% compounded daily. What is the monthly financing payment for a car worth $29,081.91 including tax(if made at the end of the month)? You will then own the car in 4 years.

3.You are financing a car worth$28,180.92including tax. Theinterest rate is6.3% compounded daily.Payments are monthly and made at the end of the month.You will own the car in 3 years. You have a down payment of $1,107.

Calculate the total amount paid for the car if purchased and financed with monthly payments for the length of your financing loan. (Purchase price = down payment + total of all payments made)

Round your answer to two decimal places. Do not enter the dollar sign. Sample input: 24562.23

(Hint: Take the down payment off the total worth of the car including tax; this is your PV_n. Then, find the monthly payment by hand using the ordinary general annuity formula or use the TVM solver. You will need an interest conversionif you do the question by handor Excel because we have daily interest but monthly payments; you will need a monthly periodic interest rate. Then find the total value of ALL your monthly payments (e.g., PMT x Total Number of Monthly Payments)and add this to your down payment; it will be way more than if you had paid for the car on the spot!)