You are saving to buy a new car in two years. You currently have $5000 in an account that pays 4% annual interest compounded quarterly. You plan on adding to that account with quarterly deposits of $500 each over the next two years. Then you will take the balance of that account to use as a down payment on your new car. You expect the car you want will cost $32,000 and that you will be able to get a loan from the dealer at a 12% annual rate for a five-year term. What will your monthly payments be on the car loan?
You are saving to buy a new car in two years. You currently have $5000 in an account that pays 4% annual interest compounded quarterly. You plan on adding to that account with quarterly deposits of $500 each over the next two years. Then you will take the balance of that account to use as a down payment on your new car. You expect the car you want will cost $32,000 and that you will be able to get a loan from the dealer at a 12% annual rate for a five-year term. What will your monthly payments be on the car loan?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
You are saving to buy a new car in two years. You currently have $5000 in an account that pays 4% annual interest compounded quarterly. You plan on adding to that account with quarterly deposits of $500 each over the next two years. Then you will take the balance of that account to use as a down payment on your new car. You expect the car you want will cost $32,000 and that you will be able to get a loan from the dealer at a 12% annual rate for a five-year term.
What will your monthly payments be on the car loan?
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