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bija089 [108]
3 years ago
7

You want to buy a new car, but you can make an initial payment of only $2,400 and can afford monthly payments of at most $500. a

. If the APR on auto loans is 12% and you finance the purchase over 48 months, what is the maximum price you can pay for the car?
Business
1 answer:
dlinn [17]3 years ago
7 0

Answer:

Ans. The maximum price you can pay for the car is $21,387

Explanation:

Hi, to find out what is the maximum price that you can pay, first we have to convert APR rate to an effective monthly rate, that is because you will make the payments in an monthly basis.

Therefore, the effective monthly rate of the credit is 12%/12 =1% effective monthly.

Now, let´s find out the maximum price of the car.

CarPrice=\frac{A((1+r)^{n}-1) }{r(1+r)^{n} } +DownPayment

Where: A is the amount of money that you can pay every month; r is 1% effective rate; n is the periods of periodic payment.

So, everything should look like this:

CarPrice=\frac{500((1+0.01)^{48}-1) }{0.01(1+0.01)^{48} } +2,400= 21,387

So, with a down payment of $2,400 and being able to pay $500 per month, the car that you can buy cannot have a price higher than $21,397.

Best of luck

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Answer:

The short run refers to a period of less than one year.

Explanation:

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7 0
3 years ago
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amm1812
Hello,

Once every 10 years, the Census Bureau does a comprehensive survey of housing and residential finance.

Hope this helps! :)
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3 years ago
Suppose that the market portfolio is equally likely to increase by 24% or decrease by 8%. Security "X" goes up on average by 29%
Alex

Answer:

The expected return on security with a beta of 0.8 is closest to 7.2%.

Explanation:

This can be determined as follows:

Since the return of security Z remains at 4% despite the change in the market, security Z is the risk-free asset.

Note that a risk free asset is an asset which its returns does not change with change in the market.

Using the Capital Asset Pricing Model (CAPM) formula, we have:

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Where;

ER = Expected return = ?

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B = Beta = 0.8

MPR = Market risk premium = Expected return on the market rate - Risk-free rate

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Therefore, we have:

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Therefore, the expected return on security with a beta of 0.8 is closest to 7.2%.

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