Update: Complete scenario 3 under Follow-Up Tasks and share the spreadsheet with the teacher by Thursday, April 11. Make sure three questions are explicitly answered.
Scenario: For your upcoming birthday, you wish to purchase a previously owned car for $18,000 (after tax). However, you do not have enough money but the car dealership allows you to finance the car at 5% APR. You are required to pay a $3600 down payment and pay $300 per month until the car and interest are paid off.
- How long does it take to finance the car?
- How much interest do you pay in total?
- How much interest do you pay a month on average? a year on average?
Task (Guided Example): To analyze how long you need to finance and how much interest you need to pay, you decide to create an amortization schedule similar to the one below.
- Assume that you missed the sixth payment. Make a copy of the amortization schedule and answer the previous questions.
- Assume that the interest rate is 6% APR instead. Make a copy of the amortization schedule and answer the previous questions.
- Assume that you wish to purchase a $500 laptop computer with your CIBC credit card that charges you 20% APR. No down payment is required. You decide to pay the $10, the minimum amount as stated on the credit bill. Make a copy of the amortization schedule and answer the previous questions.