ANSWER ALL PARTS OF QUESTION 1 1A You just bought a new Jeep

ANSWER ALL PARTS OF QUESTION 1

1A. You just bought a new Jeep Wrangler and secured dealer financing for $26,500 over 48 months at an interest rate of 1.0% per month (which is extremely high, but maybe your credit was bad, or you had no previous credit). How much are your monthly car payments? State your answer to the penny and be sure to pay attention to significant digits.

1B. After paying on your (Problem 1A) car loan for 12 months, you find out that you can refinance the loan at your parents\' credit union with a 36-month loan at an interest rate of 0.75% per month. How much do you have to borrow from the credit union to pay off the balance remaining on the original loan you got from the dealer? State your answer to the nearest dollar.

1C What are your new monthly loan payments after refinancing (Problem 1B) at your parent\'s credit union? State your answer to the nearest penny.

Solution

1a) we can find this using pmt function in excel

=pmt(rate,nper,pv,fv,type)

=pmt(1%,48,26500,0,0)

=697.85

1b)the total principal paid for the first 12 months can be found using cumprinc formuale in excle

=cumprinc(rate,nper,pv,start,end,type)

=CUMPRINC(1%,48,26500,1,12,0)

=5489.58

The principal outstanding =26500-5489.58=21010.42

the above amount needs to be borrowed

1c)use pmt formuale here

=pmt(0.75%,36,21010.42,0,0)

=668.13