Calculate the total cost of a loan

Assignment Help Corporate Finance

Reference no: EM1347811

Problem 1

Objectives:
Calculate the total cost of a loan.

Task:
Respond to each of the scenarios below. Compute the answer showing your work.

Context:

1. You are considering buying a used piano. The cash price of the piano is $600. The company selling the piano is willing to sell it to you for $50 down plus 12 monthly payments of $50. What is the total price. What is the finance charge?

2. Logan ran up a credit card debt of $1,000. He decided that he would not put any more purchases on the card until he paid off the debt. He can pay $50 a month, and the interest rate is 18 percent. On the internet, locate a loan planner tool to find out how many monthly payments Logan will have to make to pay off his debt. How many years will he be paying on the debt?

Problem 2

Objectives:
1. Explain the advantages and disadvantages of using credit.
2. Describe the concept of creditworthiness.
3. Describe the responsibilities of consumer credit.

Task: Respond to the questions below.

Context:

The wide use of credit can lead to abuses. Some people take out more credit than they can repay and refuse to pay back what they have borrowed. When merchants get stuck with unpaid balances, they pass along that cost to other customers in the form of higher prices. Thus we all pay for people who overuse credit.

Is it ethical for people to overextend their credit, knowing or suspecting that they will not be able to repay it?
What can we all do to keep the cost of products and services at reasonable levels?

Reference no: EM1347811

Questions Cloud

What is the speed initially at the bottom : Sources A and B emit long-range radio waves of wavelength 530 m, with phase of the emission from A ahead of that from source B by 90°. The distance rA from A to a detector is greater than corresponding distance rB from B by 110 m. What is the magni..

Define the coefficient of friction : A 240g ball and a 130g ball are connected by a 32 cm-long massless, rigid rod. The structure rotates about its center of mass at 150rpm.

Java program for real estate agent : Write down java program for real estate agent. Program must perform the following tasks: ask users for average house price for the each of past 5 years for single family residence of 1500 square feet.

Elucidate why the general level of wages is higher : Elucidate why the general level of wages is higher in the United States and other industrially advanced countries. What is the single most important factor underlying the long-run increase in average real-wage rates in the United States.

Calculate the total cost of a loan : Suppose you are planning buying a used piano. $600 is the cash price of the piano. The firm selling the piano is willing to sell it to you for $50 down plus twelve monthly payments of $50.

What is the magnitude of the vertical component : What is the magnitude of the vertical component of its velocity as it strikes the ground.

Illustrate what will be the consumer consumption of gasoline : Illustrate what will be the consumer consumption of gasoline now and how much will be the amount of rebate.

Creating algorithm broken into sequence of words : Katt wishes you to create an algorithm that, given a string X, determines efficiently how many ways X can be broken up into sequence of words.

Find the action-reaction pairs when a baseball is being hit : A 78 kg circus performer jumps from a 4.20 m height onto a trampoline and stretches it downward 0.3m. suppose that the trampoline obeys Hooke's law.

User Account

All Pages