Question

You are shopping for a new car and you see a car advertised at a dealership for $29,500. Your bank has pre-approved you with an APR of 7.5% for a 6-year loan of up to $30,000 to be paid in monthly installments. Amortization table build it and show values for

a)After exactly three (3) years of making payments, you sell the car $24,175. How much cash will have have after you payoff the loan
b) After exactly three (3) years of making payments, you sell the car $24,175. How much cash will have have after you payoff the loan?
c) What price would you be willing to pay for the car if you want to keep your monthly payments just under $500 (there are many possible answers here

Answer 1

To calculate cash after paying off the loan, find the remaining loan balance in the amortization table and subtract it from the selling price of the car. To determine the price with monthly payments under $500, work backwards from the monthly payment using the formula.

Step-by-step explanation:

In order to create an amortization table, we need to calculate the monthly payments, the total interest paid, and the remaining loan balance at each month. To calculate the monthly payment, we can use the loan amount, the annual percentage rate (APR), and the loan term. For this loan, the monthly payment can be calculated as follows:

• Loan Amount: $29,500
• APR: 7.5%
• Loan Term: 6 years

We can use a formula to calculate the monthly payment:

Monthly Payment = (Loan Amount * APR * (1 + APR)^(Loan Term * 12)) / ((1 + APR)^(Loan Term * 12) - 1)

Plugging in the values from the given information, we get:

Monthly Payment = ($29,500 * 0.075 * (1 + 0.075)^(6 * 12)) / ((1 + 0.075)^(6 * 12) - 1)

Solving this equation will give us the monthly payment.

Once we have the monthly payment, we can use it to create an amortization table. Each row in the table represents a month, starting from the first month of the loan. The table will include the month number, the beginning balance, the payment amount, the interest paid, the principal paid, and the remaining balance. By filling in these values for each month, we can create the amortization table.

a) After three years, you decide to sell the car for $24,175. To calculate the cash you will have after paying off the loan, you need to determine the remaining loan balance after three years. Look for the corresponding row in the amortization table and find the remaining balance. Subtract this balance from the selling price of the car to calculate the cash you will have.

b) To calculate the cash you will have after paying off the loan, you need to determine the remaining loan balance after three years. Look for the corresponding row in the amortization table and find the remaining balance. Subtract this balance from the selling price of the car to calculate the cash you will have.

c) To find the price you would be willing to pay for the car to keep your monthly payments just under $500, you can work backwards from the monthly payment. Start with a price, calculate the monthly payment using the formula mentioned earlier, and adjust the price until the monthly payment is just under $500.