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Use interest rates table to answer 4. You decide to purchase a new car and negotiate a price with a dealer for $20,000. As part
Use interest rates table to answer
4. You decide to purchase a new car and negotiate a price with a dealer for $20,000. As part of the agreement, the dealer offers to finance your purchase through a 5-year, 5-percent "auto loan." The 5 percent interest rate is a surprise to you since you had checked with your bank about financing the purchase, and your bank had quoted you a 7 percent interest rate on a five-year installment (amortized) loan. In reading the fine print of the dealer's "auto-loan" agreement, you discover that under the terms of the "auto loan" you are required to make annual payments of $4,000 plus 5 percent of the initial principal ($20,000) for each of the 5 years. Are you better off agreeing to pay for the automobile under the dealer's "auto loan" or financing the purchase at 7 percent through your bank amortizing the loan over 5 years? What is the present value of your gain or loss? U.S. DEPARTMENT OF THE TREASURY Resource Center Daily Treasury Yield Curve Rates Get updates to this content XML These data are also available in XML format by clicking on the XML icon. The schema for the XML is available in XSD format by clicking on the XSD icon. If you are having trouble viewing the above XML in your browser, click here To access interest rate data in the legacy XML format and the corresponding XSD schema, click here. Select type of Interest Rate Data Daily Treasury Yield Curve Rates Select Time Period Current Month Go Go 3 Mo 6 Mo 1 Yr 2 Yr 3 Yr 7 Yr 10 Yr 20 YI 30 Yr Date 08/03/20 1 Mo 0.09 2 Mo 0.09 5 Yr 0.22 0.10 0.11 0.12 0.11 0.13 0.40 0.56 1.01 1.23 08/04/20 0.09 0.09 0.09 0.11 0.14 0.11 0.10 0.19 0.36 0.52 0.96 1.19 08/05/20 0.08 0.09 0.10 0.12 0.12 0.11 0.13 0.22 0.39 0.55 1.00 1.22 0.07 0.11 0.10 0.11 0.14 0.11 0.13 0.21 0.39 0.55 0.98 120 08/06/20 08/07/20 08/10/20 0.08 0.09 0.10 0.12 0.14 0.13 0.14 0.23 0.41 0.57 1.01 1.23 0.09 0.11 0.11 0.13 0.13 0.14 0.15 0.24 0.42 0.59 1.04 1.25 08/11/20 0.08 0.10 0.11 0.12 0.15 0.16 0.18 0.27 0.46 0.64 1.10 1.32 08/12/20 0.08 0.10 0.11 0.12 0.13 0.16 0.19 0.30 0.50 0.69 1.15 1.37 08/13/20 0.08 0.10 0.10 0.12 0.14 0.16 0.19 0.32 0.52 0.71 1.20 1.42 0.09 0.10 0.10 0.13 0.14 0.18 0.29 0.51 0.71 1.21 1.45 08/14/20 08/17/20 0.12 0.12 0.09 0.10 0.10 0.13 0.14 0.18 0.29 0.49 0.69 1.19 0.08 0.09 0.09 0.13 0.13 0.14 0.17 0.27 0.47 0.67 1.16 1.40 08/18/20 08/19/20 0.07 0.09 0.11 0.12 0.13 0.14 0.17 0.29 0.48 0.68 1.20 1.42 08/20/20 0.08 0.09 0.11 0.13 0.12 0.13 0.15 0.26 0.46 0.65 1.15 1.38 08/21/20 0.07 0.09 0.10 0.12 0.13 0.16 0.16 0.27 0.46 0.64 1.13 1.35 08/24/20 0.09 0.10 0.12 0.12 0.14 0.14 0.18 0.28 0.47 0.65 1.14 1.35 08/25/20 0.08 0.10 0.11 0.12 0.13 0.15 0.18 0.30 0.49 0.69 1.18 1.39 08/26/20 0.08 0.10 0.11 0.12 0.12 0.16 0.18 0.28 0.50 0.69 1.20 08/27/20 0.09 0.10 0.11 0.11 0.13 0.16 0.19 0.53 0.74 1.28 1.50 08/28/20 0.09 0.09 0.10 0.11 0.12 0.14 0.16 0.28 0.51 0.74 1.29 1.52 Step by Step Solution
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