This is only one question but it has multiple parts. Please answer all parts and use the correct formulas and not Excel. Do NOT use Excel to solve the problems and show your work for each part.

2. (20 points) After accepting your first job after graduation, you have decided to use your signing bonus to purchase a car. The dealer has a special promotion such that if you finance at least $20,000 they will give you al 5 year loan with an APR of 2%. Assume that you take them up on their offer and finance exactly $20,000. (a) (5 points) What will your monthly payment be on this loan? $4,743-17 -3pt F=PC1+1)h = $20,000(1-02)5 = $22,081.62 .O2 = $4,243.17 A= F = $22,081.627 (1.02)5-1 litin (7 points) What will your ending balance on the loan be at the end of your first year of payments? Original Principle: $20,000 $16,158.25 Excel Loan Term (Years) : 5 Annual Interest Rate: 27 month 12 Payments per year: 12 (=IF(ROUND LEZO, 5) 70, E2O-D21, 0 Payment: $4, 243.17 EZO : $16,481:33 D21: 5323.09 (c) (8 points) Now assume that you decide to pay an additional $50 per month on the loan (applied directly to principal). How much faster (in months) will you pay off the loan with this strategy compared to the original 5 year term? p=520,40142 ($4243.17+ $50) $20,401.42 $4,293.17 =4.75 years 4.75 years = 57,02 5 years = 60 months months -apt . 60m-57.02m = 2.98 months faster 2. (20 points) After accepting your first job after graduation, you have decided to use your signing bonus to purchase a car. The dealer has a special promotion such that if you finance at least $20,000 they will give you al 5 year loan with an APR of 2%. Assume that you take them up on their offer and finance exactly $20,000. (a) (5 points) What will your monthly payment be on this loan? $4,743-17 -3pt F=PC1+1)h = $20,000(1-02)5 = $22,081.62 .O2 = $4,243.17 A= F = $22,081.627 (1.02)5-1 litin (7 points) What will your ending balance on the loan be at the end of your first year of payments? Original Principle: $20,000 $16,158.25 Excel Loan Term (Years) : 5 Annual Interest Rate: 27 month 12 Payments per year: 12 (=IF(ROUND LEZO, 5) 70, E2O-D21, 0 Payment: $4, 243.17 EZO : $16,481:33 D21: 5323.09 (c) (8 points) Now assume that you decide to pay an additional $50 per month on the loan (applied directly to principal). How much faster (in months) will you pay off the loan with this strategy compared to the original 5 year term? p=520,40142 ($4243.17+ $50) $20,401.42 $4,293.17 =4.75 years 4.75 years = 57,02 5 years = 60 months months -apt . 60m-57.02m = 2.98 months faster