Business, 14.06.2021 20:30 mathlady12

Your dream is about to come true! You are about to buy your first classic sports car. To do so, you have arranged to borrow $65,000 from your local credit union. The interest rate on the loan is 6.00%. To simplify the calculations, assume that you will repay your loan over the next four years by making annual payments at the end of each year. According to the loan officer at the credit union, you must answer the following questions before you can go pick up your new car. a. How much is the annual payment on your new car loan?
b. How much of your Year 2 payment will constitute interest on your loan?
c. How much of your Year 3 payment will be used to repay principal on the loan?
d. How much will you pay in total interest to finance the purchase of your $65,000 car?

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Answer from: 22chandlerlashley

Car Loan

a. The annual payment on the new car loan = $18,758.45.

b. Year 2 payment that is interest on the loan = $3,008.49.

c. Year 3 payment that is principal repayment = $16,694.95

d. The total interest to be paid to finance the purchase of the $65,000 car is:

= $10,033.79.

Explanation:

Data and Calculations:

Loan Amount 65000

Loan Term 4 years 0 months

Interest Rate 6

Compound Annually (APY)

Pay Back Every Year

Results:

Payment Every Year $18,758.45

Total of 4 Payments $75,033.79

Total Interest $10,033.79

Principal 87%

Interest 13%

Amortization Schedule

Beginning Balance Interest Principal Ending Balance

1 $65,000.00 $3,900.00 $14,858.45 $50,141.55

2 $50,141.55 $3,008.49 $15,749.95 $34,391.60

3 $34,391.60 $2,063.50 $16,694.95 $17,696.65

4 $17,696.65 $1,061.80 $17,696.65 -$0.00

Answer from: Quest

Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan

Answer from: Quest

The answer for edgenuity is c: color

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