Karou is considering different options for financing the $$14,000$ balance on her planned new car purchase. The cheapest advertised rate among the local banks is $6\mathrm{.}75$ percent for

a $48-$month car loan. The current rate on her revolving home equity line is $8\mathrm{.}5$ percent. Karou is in the $25$ percent federal tax bracket and the $5\mathrm{.}75$ percent state tax bracket.

a$.$ Calculate Karou's monthly car payment using your financial calculator. Compare the payment amount if she uses the $48-$month car loan through her local bank versus her home

equity line of credit. Assume both loans will amortize over $48$ months, and use the simple interest method.

b$.$ What are Karou's income tax savings over the life of the loan if she chooses to use her home equity line of credit to finance the purchase of her new car?

c$.$ Which loan offers the lower payment? Which loan has the lower after$-$tax cost? Use this information to determine which loan she should choose.

d$.$ In a discussion with her father about financing her new car, Karou was surprised to hear that he once financed a car with the add$-$on method of interest calculation. He planned

to repay the $$2,200$ loan within $1$ year but was able to do so after $9$ months because of a bonus he earned at work. The interest rate was $5\mathrm{.}75$ percent. Calculate the monthly

payments, as well as the final payment to pay off the loan. How much interest was "saved" or rebated, using this method of financing and the rule of $78$ s$?$

e$.$ Assume Karou's father could finance $$2,200$ today at $5\mathrm{.}75$ percent using the simple interest method of calculation. How much would the payments be$?$ Calculate the final

payment to pay off the loan in $9$ months. How much interest was "saved"?

f$.$ Considering the information in parts $($d$)$ and $($e$),$ calculate the difference in finance charges assuming neither loan was paid off early.

g$.$ Assuming Karou did not have access to a home equity line, what factors might she consider to reduce the lender's risk and therefore "buy" herself a lower$-$cost loan? $($Hint:

Consider Principle $8$: Risk and return go hand in hand.$)$

a$.$ Calculate Karou's monthly car payment. Compare the payment amount if she uses the $48-$month car loan through her local bank versus her home equity line of credit. Assume

both loans will amortize over $48$ months and use the simple interest method.

Using the $6\mathrm{.}75$ percent $48-$month car loan of $$14,000,$ Karou's monthly payment is $$.($Round to the nearest cent.$)$