John can buy $64,500 Car from the dealer at 5.5% p.a. with a $10,000 dollar Balloons payment at the end of the 60 months of the Ioan. You still are charged interest on the Balloons payment but do not pay the actual amount off during the term of your loan, you can choose to pay the Balloon payment at the end of the loan to keep the car or else the dealer will take the car back.

A） Normally cars deprive e at 30% per year, What would this car be worth at the end of the loan?

B) Given the amoun of car would have depreciated to would you pay the ballon payment to keep it at the end of your loan? Justify mathematically.

C)if car depreciate at 10% would this change your answer,show mathematically why?

Answer rating: 100% (QA)

At the end of 60 months that is 5 years we need to pay 10000 a Worth of car at the end of loan 10840... View the full answer