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The Cost of Purchasing a Vehicle (Group Project 2)

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Question;The Cost of Purchasing a Vehicle (Group Project 2)How much will a new car cost? The average cost of a new car in 1990 was $14,371. In 2003 the average cost of a new car had risen to $22,360 (Source: U.S. Bureau of Economic Analysis). Therefore, a major consideration in purchasing a new vehicle is the amount of the monthly payment you will be making. How much money do you have in your monthly budget for a car payment? The amount of the monthly payment is a function of the cost of the car, the size of your down payment, the finance rate and the period of the loan. The formula used to compute the monthly payment is:PMT=P(r/12) / 1-(1+r/12)-mP is the amount of money being financed (principal), r is the finance rate expressed as a decimal, and m is the number of monthly payments. [Total points: 18]Hadley Motors is advertising a used Nissan Sentra for $9,788 with financing of 3.5% over 36 months. They also offer a financing rate of 6.5% over 72 months.1. Use the formula above to find your monthly payment on the Sentra if you make a $2000 down payment and want to pay off the car in 36 months. [1 point]2. What is your monthly payment if you choose to finance over 72 months, given the same down payment. [1 point]3. Using the monthly payment from 1 and 2 find the total cost of the car if you finance over 36 months and over 72 months [2 points]4. Now find the total cost of financing for each period [2 points].The Monarch Automobile Dealership is offering a new Ford Ranger truck for $17,500. The dealership offers several plans for acquiring the truck. To buy the truck, a 10% down payment is required. One option is to (a) receive a $2,000 rebate, taken before the down payment is figured, and finance the balance over 72 months at 5.9%. Another option is to (b) finance the car over 48 months at 0% in lieu of the rebate. Or, (c) after the down payment, finance the balance at 1.5% for 24 months.1. Find the monthly payment for each of the financing plans. [3 points]2. Find the total cost of the truck for each of the finance plans. [3 points]3. What are the advantages of each of the finance plans?[3 points]4. What are the disadvantages of each financing plans?[3 points]

 

Paper#52068 | Written in 18-Jul-2015

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