Reference no: EM132635025
You want to buy a car valued at $48,000. You will make an upfront down-payment of $5,000 on the car, and borrow the rest of the money from your bank. Your bank will give you a 5-year loan at 2.5% APR compounded semi-annually. You plan to make biweekly payments (i.e., one payment every two weeks) on the loan. The bank requires that you make the first payment two weeks after you signed the loan contract. Find the answer to the following questions.
a. What is the effective annual rate?
b. What is the effective biweekly rate?
c. What will be your biweekly loan payment?
d. What is the balance on your loan in 3 years' time, after 78 payments?
e. Show the amortization schedule (table) for the first 5 payments. If you are doing this on an Excel spreadsheet, copy and paste the first 5 rows from the amortization schedule into a Microsoft Word (or any other word-processing software) document file.
f. You want to put enough money into your bank account to pay for the loan payments for the next six months. If your bank account yields an APR of 2% (compounded bi-weekly), how much money should you put in your bank account now?
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: You want to buy a car valued at $48,000. You will make an upfront down-payment of $5,000 on the car, and borrow the
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