Determine what should be the down payment

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Question - Joanne Krol wants to purchase a newer model automobile to replace her rusty 1989 car. The bank where Joanne has a checking account, US Bank, is advertising an annual interest rate of 6.75 percent for a three-year loan on used cars. By selling her old car and using some cash she has accumulated, Joanne has $3,000 available as a down payment. Under her current budget, Joanne figures that the maximum monthly loan payment she can afford is $300.

Required -

Q1. She wants to find out the maximum car price she can afford and keep the monthly payment no higher than $300. She can­not alter the interest rate or the three-year term.

Q2. Use the price that you have calculated in Q1 and determine what should be the down payment if Joanne wants to reduce her monthly payment to $200?

Q3. Calculate the total cost of the purchase (price, down payment, monthly payments, and interest).

Reference no: EM133039682

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