(15 points) You have just started your first job and you want to have the basic appliances (fridge, washer, dryer, etc.) in your apartment. You face the following choices: (i) Purchase all appliances at the store using a bank loan. There is no down payment as the bank can take your appliances if you default on the loan. The loan is at the annual market rate of 5%, and the loan amount is $6,000 to be repaid monthly over 4 years.(ii) Rent-to-buy from the same store. The monthly rental is $125 for 48 months and then you pay $1,000 to own all the appliances. What is the net cost today of the cheapest option? (Enter just the number without the $ sign or a comma; round off decimals. Since this asks for a cost, you just enter the number without a negative sign.) Question 9
(15 points) Two years ago, you purchased a $20,000 car, putting $4,000 down and borrowing the rest. Your loan was a 48-month fixed rate loan at a stated rate of 6% per year.You paid a non-refundable application fee of $100 at that time in cash. Interest rates have fallen during the last two years and a new bank now offers to refinance your car by lending you the balance due at a stated rate of 4% per year. You will use the proceeds of this loan to pay off the old loan. Suppose the new loan requires a $200 non-refundable application fee. Given all this information, should you refinance? How much do you gain/lose if you do? (no, lose15)
(no, lose 29)
(no, lose 25)
(yes, gain 17)
(15 points) Jingfei bought a house 10 years ago for $200,000. Her down payment on the house was the minimum required 10% at that time she financed the remainder with a 15-year fixed rate mortgage. The annual interest rate was 10% and she was required to make monthly payments, and she has just made her 120th payment. A new bank has offered to refinance the remaining balance on Jingfei's loan and she will have to pay $1,900 per month for the next 5 years, but the total...
Please join StudyMode to read the full document