The greatest interest rate that John can accept and meet the criteria is 12.25% compounded monthly
The monthly payment formula for a loan:
Where PV is the principal value of the loan,
r is the rate per month,
n is the number of months,
Here, PV = $ 4,500, n = 36,
Let r be the annual rate of interest,
P ≤ 150
Thus, the greatest annual interest rate = 0.1225 = 12.25 %
Therefore, Option C is correct.
To know more about the monthly payments and interest rate, refer to the link below:
Answer:
a.- $ 3,529.82
b.- $ 3,512.11
c.- $ 132,77
Explanation:
In each case, we must calculate the value of their current savings and the additional investment.
The saving are the same for each scenario so let's calculate that first:
Principal 1,500.00
time 15 years
rate 0.01000
Amount 1,741.45
Then we add the funds generated from the investment:
a.- 110 annuity due for 15 month:
C $ 110
time 15 months
rate 0.01
FV $1,788.3651
We add the savings and get a total of: $ 3,529.82
b.- 110 ordinary annuity
C $ 110
time 15 months
rate 0.01
FV $1,770.6585
Plus, original savings of 1,741.45 = 3,512.11
c.-
If they need 3,900 then the fund must cover the difference between these and the savings future value:
3,900 - 1,741.45 = 2,158.55
Now we calculate the PMT, considering the payment are at the beginning:
FV $ 2,158.55
time 15
rate 0.01
C $ 132.770