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You are considering buying a new car worth $15,000. You can finance the car either by withdrawing cash from your savings account (option 1), which earns 8% interest compounded monthly, or by borrowing $15,000 from your dealer for five years at 11% interest compounded monthly and quarterly payments (option 2). 1. Show the loan amortization schedule for option 2 (50 points) 2. How much interest will you pay over the lifetime of the loan

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jepessoa

Answer:

1) since there is not enough room here, I used an excel spreadsheet.

2) quarterly payment = $987.41 x 20 payments = $19,748.20

total interests paid = $19,748.20 - $15,000 = $4,748.20

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