You have recently finished your BBA at the University and received a job offer from a large international firm. You are thinking of purchasing a new car immediately. The car costs $320,000. The bank quotes an interest rate of 12 percent APR for a 36-month loan with a 10 percent down payment. The payments on the loan are made monthly at the end of each month.

(a) What is the amount of the loan?

(b) What will your monthly payment be?

(c) What is the effective annual interest rate on the loan?

(d) How much total interest is paid over the life of the loan? 

(e) Suppose you plan on trading the car in for a new one after two years. What will the loan balance be when you trade the car in? 

Answer rating: 100% (QA)

a The amount of the loan can be calculated by subtracting the down payment from the cost of the car ... View the full answer