What is the payment for the conventional loan

Assignment Help Financial Management

Reference no: EM131952977

You are purchasing a car today that costs $25,000. You have been given the following financing options for the car. Option 1 is conventional 4-year financing at an interest rate of 4%, compounded monthly. This option requires monthly payments. Option 2 is a balloon loan which requires monthly payments of $375 for 2 years and then a final balloon payment for the remaining balance. The interest rate on this loan is 2.5%.

What is the payment for the conventional loan (option 1)?

Prepare an amortization schedule for option 1.

What will the balloon payment be for the balloon loan (option 2)?

Prepare an amortization schedule for option 2.

Which option do you prefer and why? What additional considerations are there with respect to the balloon loan.

Reference no: EM131952977

Questions Cloud

Capital budgeting analysis is based : Capital budgeting analysis is based on. Life insurance provides a generally income tax-free lump sum of money for your survivors

What price would the bonds sell for assuming investors : What price would the bonds sell for assuming investors do not expect them to be called?

What is his geometric return over this period : Your grandfather invested $1,000 in a stock 33 years ago. What is his geometric return over this period?

Explain the various inputs to present value of annuity : Explain the various inputs to the present value of an annuity (i.e. C, r, t, and PVA). How is the value of the annuity impacted by each input?

What is the payment for the conventional loan : What is the payment for the conventional loan. What will the balloon payment be for the balloon loan (option 2)?

Default risk of investing : Your sister would like to lower her default risk of investing but still want to invest in corporate bonds.

An important concept in finance is the time value of money : An important concept in finance is the Time Value of Money, or TVM. What will the US debt be in the future?

Generate profit and loss statement : Generate a Profit and loss statement that illustrates the profit or loss or the year ending sales of 795.

What is the net new long-term debt : If spending on net fixed assets and net working capital was zero, and if no new stock was issued during the year, what is the net new long-term debt?

User Account

All Pages