Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. use the information below to answer the following

USE THE INFORMATION BELOW TO ANSWER THE FOLLOWING THREE QUESTIONS Vito Scaletta just bought his dream car,...

Free

70.2K

Verified Solution

Question

Finance

USE THE INFORMATION BELOW TO ANSWER THE FOLLOWING THREEQUESTIONS

Vito Scaletta just bought his dream car, 2019 Aston Martin DB9that cost $208,700. He paid $30,000 down and financed the balanceover 84 months at 6.25% p.a. (Assume that Vito makes all requiredpayments on time).

What will the balance on Vito’s loan be at the end of the fourthyear (that is, immediately after Vito makes his 48th payment on theloan)?

Answer & Explanation Solved by verified expert
4.1 Ratings (580 Votes)

Step-1:Calculation of monthly payment
Monthly payment = Loan amount / Present value of annuity of 1
= $       1,78,700 / 67.89554419
= $       2,631.98
Working:
Loan amount = Cost of Car - Down payment
= $       2,08,700 - $           30,000
= $       1,78,700
Present value of annuity of 1 = (1-(1+i)^-n)/i Where,
= (1-(1+0.005208)^-84)/0.005208 i 6.25%/12 = 0.005208
= 67.89554419 n = 84
Step-2:Calculation of balance of loan at the end of fourth year
Loan balance is always present value of remaining monthly payment.
Loan balance = Monthly payment x Present value of annuity of 1
= $       2,631.98 x 32.74913262
= $     86,195.20
Working:
Present value of annuity of 1 for remaining time = (1-(1+i)^-n)/i Where,
= (1-(1+0.005208)^-36)/0.005208 i 6.25%/12 = 0.005208
= 32.74913262 n 84-48 = 36
So,
Balance on Vito’s loan will be at the end of the fourth year $ 86,195.20

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

USE THE INFORMATION BELOW TO ANSWER THE FOLLOWING THREEQUESTIONSVito Scaletta just bought his dream car, 2019 Aston Martin DB9that cost $208,700. He paid $30,000 down and financed the balanceover 84 months at 6.25% p.a. (Assume that Vito makes all requiredpayments on time).What will the balance on Vito’s loan be at the end of the fourthyear (that is, immediately after Vito makes his 48th payment on theloan)?

Other questions asked by students

Q

Traditionally Protista has been called a kingdom yet it is now recognized as a polyphyletic...

Biology
Q

Consider the DTMC shown in the figure what s the probability measure of the union...

Algebra
Q

Use an Addition or Subtraction Formula to simplify the equation.sin(?) cos(3?) + cos(?) sin(3?) =...

Algebra
Q

A box of washing powder is 12 cm tall and contains 750 g of washing...

Algebra
Q

Kaymer Industries Inc. uses a job order cost system. The following data summarize the operations...

Accounting
Q

Fair Value Journal Entries, Trading Investments Gruden Bancorp Inc. purchased a...

Accounting
Q

Un fondo de caja chica de $100 tiene efectivo de $15 y recibos de $80....

Accounting
Q

Please fill in the blank and the table below. ...

Accounting
Q

On January 1, 2019, Grimsley Inc. purchased 10,000 shares of Brown Company for $100/share. Brown...

Accounting
Q

On January 1, Escobar Supplys inventory account had a beginning balance of $7,000,000. Escobar engaged...

Accounting
Q

Required information Exercise 11-31 (Algo) Impairment; goodwill [LO11-8] [The following information applies to the questions...

Accounting
Q

Filer Manufacturing has 4,935,162 shares of common stock outstanding. The current share price is $57.69,...

Finance