Description
Answer the following questions. Show all formulas used. Round all answers to two decimal places
1. Choose a new car that you like and might be interested in buying. List the type of car and the cost here
2. Suppose you knew about this car five years ago and had deposited a single amount of money into a savings
account to purchase the car. If the savings account had a 3% interest rate compounded monthly, how much
should you have deposited?
3. Suppose you knew about the car five years ago and decided to deposit a certain amount of money each
month into a savings account to be able to purchase the car today. If the savings account had a 3% interest
rate compounded monthly, how much should you have deposited each month?
4. Suppose you didn't save up to buy the car and instead need to finance the total cost of the car. You found
an auto loan for 48 months at 6.5%. How much will your monthly payment be?
5. Let's compare the interest in each scenario.
A. In question 2, how much interest did you earn over the five years?
B. In question 3, how much interest did you earn over the five years?
C. In question 4, how much interest did you pay over the four years?
6. If any of these three options were possible for you financially, which option would you choose and why?