Business, 28.02.2021 16:50 allieb12334

You are looking to buy a 2018 Ford Focus Titanium Hatchback with sunroof and leather seatsat a price of $26,000. Being a college student, you have cash to pay taxes, title, license and feesbut your parents offer to give you 10% of the price, $2,600, as a down payment and you needto finance the remainder of $23,400. You smartly researched your finance options and got pre-approval at a 3.6% APR with monthly compounding for 5 years on your own so you are not at themercy of depending on financing from the car dealership. Ford is offering 0% APR financing or$3,250 cash back which would be used as an additional down payment that reduces the amountthat you would need to finance. You would use your 3.6% APR pre-approved financing if youelect the $3,250 cash back option. Answer the following questions. I. What would be your monthly car loan payment under the Fordâs 0% APR financing offer (assume a 60-month loan term)?
II. What would be your monthly car loan payment under the Fordâs $3,250 cash back offer and your 3.6% APR pre-approved financing?
III. At what APR would you be indifferent between the two offers? In other words, at what APR would you have the same monthly payment (assuming a 60-month loan term) for the $3,250 cash back offer as you would with the 0% APR financing offer?
IV. Assume you go with the offer in question #II. Construct an amortization schedule for the loan for all 60 monthly payments. What is your loan balance after 36 months?
V. Now assume you were willing to make a monthly car loan payment of $450. Re-do your amortization schedule from question #IV with this monthly payment. How long will it take to pay off the loan with the $450 monthly payment?

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