WS_Ch 6_FIN 333HYB Please show your work 1. If you buy a car and finance it with a $6,000, 36-month loan at 5 percent APR, how much total interest will you pay over the life of the loan? Hint: Find each payment, multiply that number by the number of times you pay that amount and subtract the original loan amount.

2. What factors should you consider when deciding between a 48-month loan at 6 percent APR and a 36-month loan at 5 percent APR? Simply explain. 3. You bought a car three years ago for $20,000 and financed $16,000 at 6 percent APR for 60 months. You are now thinking about trading in that vehicle for a new one and would like to know how much you still owe on the loan. Assuming that you have already made 36 payments, what is the balance remaining on your loan?

3. Greta has decided to buy a condominium instead of renting. She estimates the following costs: purchase price, $103,000; down payment, $3,000; mortgage payment, $599.55 per month ($7,195 per year, of which $5,967 is interest in the first year); property tax, $1,300; homeowners insurance, $500; repairs and maintenance, $500; closing costs, $2,000. The annual increase in the condos value is estimated at 4 percent. She earns 1 percent on her savings account after tax, her marginal tax rate is 25 percent, and she does not itemize deductions. What is Gretas total first-year cost of buying? You may find it helpful to use Excel Worksheet 6.5 to answer this question.

5. Suppose you are shopping for a mortgage and would like to finance $200,000. A lender offers you a conventional 30-year mortgage at 6 percent with no points (monthly payment = $1,199) or a 5.5 percent rate with one point (monthly payment = $1,136). How would you decide whether it makes sense to buy down your rate by paying the point?

6. You want to buy a home, and you have $15,000 available to cover the down payment and closing costs. Based on your household budget, you estimate that you can afford to allocate $1,200 per month to housing costs. Your real estate agent has given you the following estimates for the monthly non-financing costs of home ownership: property taxes, $200; homeowners insurance, $75; repairs and maintenance, $50. Your lender has provided an estimate of $3,000 for closing costs. What is the maximum you can afford to pay for a home, assuming current mortgage rates are 6 percent? You may want to use Excel Worksheet 6.6 in solving this problem.

Please show your work.

A. $157,943

B. $145,943

C. $160,943

D. $163,943