Suppose that you just purchased a used car worth $12,000 in today’s dollars. assume also that, to finance the purchase, you borrowed $10,000 from a local bank at 9% compounded monthly over two years. assume that the average general inflation will run at 0.5% per month over the next two years.

a) what is the monthly payment charged by the bank? (5)

b) determine the annual inflation-free interest rate for the bank, (5)

c) what equal monthly payments in terms of constant dollars over the next two years, are equivalent to the series of actual payments to be made over the life of the loan

A) Monthly Payment = $457

B) Inflation-free interest rate (month) = 0.2488%, (yearly) = 2.99%

C) Equal monthly payments = $429.75

Explanation:

Requirement A

We know,

Present value of Annuity = PMT ×

Given,

Present value = $10,000

Number of period, n = 2

Interest, i = 0.09

Monthly compounded, m = 12

Therefore,

$10,000 = PMT ×

or, $10,000 = PMT × 21.8891

or, PMT = $457 (rounded to nearest whole number)

Therefore, monthly payment charged by the bank is $457.

Requirement B

We know, Inflation-free interest rate =

Given,

Monthly interest rate = i/m = 0.09/12 = 0.0075

Monthly inflation rate = 0.5% = 0.005

Therefore,

Inflation-free interest rate =

Inflation-free interest rate = 0.0024876 or, 0.2488% per month.

Therefore, the annual inflation-free interest rate for the bank = 0.2488% × 12 = 2.99%

Requirement C

We know, equal monthly payments = Borrowed Money × (Actual payment, monthly inflation-free interest rate, number of period)

Given,

Borrowed money = $10,000

Down Payment = $2,000

monthly inflation-free interest rate = 0.2488%

number of period = 24

Equal monthly payments = $10,000 × (Actual Payment, 0.2488%, 24)

But we have to use Present value of annuity formula to find the appropriate monthly payments

$10,000 = PMT ×

or, 10,000 = PMT × 23.2694

or, $429.75

the correct answer option is b. a single paragraph.

explanation:

when you are thinking about paragraph​ topics, you should always choose a subject that can be adequately addressed in a single paragraph.

a paragraph is a piece of writing consisting of a few sentences that deal with a single theme. it has only a single idea that the paragraph revolves around and talks about.

so a paragraph topic must be chosen wisely where a single idea can be communicated in a single paragraph.

the answer is: c.that person might be arrested and deported

filling w-4 form incorrectly usually would rise suspicions from government's auditors. when they notice such mistakes, they would send their teams to investigate the situation further.

if those investigation teams believe that the incorrectness is done on purpose (with malicious intent), that person can be arrested or deported