a. A high-pressure real estate guy with a toupee wants you to buy a $200,000 home...
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a. A high-pressure real estate guy with a toupee wants you to buy a $200,000 home in Old Metairie. He does not know it yet, but you are soon to whip out your trusty financial calculator. Hmm... I want to put 3% down, I can get a 30-year loan for the balance at 6.75%, but will that exceed the $1,200 per month that I can afford to pay? If not, how much more would I have to put down to get the payments down to $1,200 per month? b. The brother of that real estate guy sells cars. If you want a $22,000 car you can have 2.9% financing with 10% down or $4,000 cash towards the down payment with ordinary 7.4% financing and a minimum of 10% down. Assume that the loan is for 4 years. Which alternative yields the lowest monthly payment? c. Which type of financing will cost you less in the long term? a. A high-pressure real estate guy with a toupee wants you to buy a $200,000 home in Old Metairie. He does not know it yet, but you are soon to whip out your trusty financial calculator. Hmm... I want to put 3% down, I can get a 30-year loan for the balance at 6.75%, but will that exceed the $1,200 per month that I can afford to pay? If not, how much more would I have to put down to get the payments down to $1,200 per month? b. The brother of that real estate guy sells cars. If you want a $22,000 car you can have 2.9% financing with 10% down or $4,000 cash towards the down payment with ordinary 7.4% financing and a minimum of 10% down. Assume that the loan is for 4 years. Which alternative yields the lowest monthly payment? c. Which type of financing will cost you less in the long term?
Expert Answer:
Answer rating: 100% (QA)
a To calculate the monthly payment required for this loan you will need to use the PV present value ... View the full answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
Posted Date:
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