1. Choose a new car to buy. It can be a realistic purchase or your dream car. Figure out the costs of buying this car by filling
in the blanks below. You can pay a 10 percent down payment, and your credit history is good enough to get a five-year loan with an interest rate of 5 percent. Make/Model:
Manufacturers suggested retail price (MSRP):
Cost of options (if applicable):
Sales tax of 9 percent (the MSRP, plus any options, multiplied by 0.09):
Total cost (the MSRP, options costs, and sales tax added together):
10 percent down payment (total cost multiplied by 0.1):
Amount needed to borrow (total cost minus the down payment):
Estimated total interest paid (amount borrowed multiplied by 0.05, or 5 percent, per year for five years):
Actual cost of the car (total cost plus the total interest paid):
2. Now find a used car to buy, and figure out the costs of buying this car by filling in the blanks below. You don't have enough money for a down payment, and your credit history is so new that you have to get a five-year loan with an interest rate of 10 percent to make the purchase.
Make/Model:
Asking price:
Sales tax of 9 percent:
Total cost:
Estimated total interest paid (amount borrowed multiplied by 0.1, or 10 percent, per year for five years):
Actual cost of the car (total cost plus the total interest paid):
3. If you were going to buy one of these two cars tomorrow, which car would you choose, and why?
Figure out the costs of buying the two cars listed below by filling in the blanks in the table. You can pay a 10 percent down payment, and your credit history is good enough to get a five-year loan with an interestrate of 5 percent. To determine the monthly payment and interest paid, use an online loan calculator - for example: . Put in the amount to borrow, 5 percent interest rate and 5 years. (24 points)
