You are interested in arranging financing to purchase a new car from Bloomington Cars, Inc. The car that you want has a sticker price of $42,000, an instant rebate of $3,500, a fair market value of $39,000, and a great sound system. The salesperson, while smoothing over his comb-over, taps his pinky ring on the hood of the car and tells you, “You picked the best car we have. I can also kick in a free Bloomington Cars coffee mug.” Since you love the car, you hop up and down and say, “Sold! I’ll take it.” You sign a loan contract for 60 monthly payments based on a rate of 7.3% per year and drive home with your new car and coffee mug, listening to that great sound system. (Your market rate of return for the risks you pose for a car loan is 5.5%.)

What is your monthly payment (rounded to two places)?

Group of answer choices

$802.25

$777.78

$767.81

$707.98

None of the above

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Question 21 pts

How much value did you destroy in pursuit of that great sound system and your free coffee mug (rounded to two places)?

Group of answer choices

$499.86

$1,197.03

$3,000.06

$2,324.09

None of the above

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Question 31 pts

What would have been a “fair” monthly payment (rounded to two places)?

Group of answer choices

$744.95

$837.61

$735.39

$767.43

None of the above

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Question 41 pts

Based on Questions #1 and #3, how much are you overpaying each month (rounded to two places)?

Group of answer choices

$26.82

$17.46

$8.24

$32.87

None of the above

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Question 51 pts

If you come to your senses in 12 months and realize what a bad deal you negotiated and would like to pay off this bad loan, how much do you owe (rounded to two places)?

Group of answer choices

$36,854.88

$33,014.89

$8,859.51

$31,878.28

None of the above

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Question 61 pts

How much interest will you pay in the first year of the loan (rounded to two places)?

Group of answer choices

$9,213.72

$2,592.00

$6,621.72

$3,452.28

None of the above

Answer rating: 100% (QA)

D 456 Parameter 457 Sticker Price 458 Rebate 459 Net price loan amount 460 Fair mark... View the full answer