Best Cost Car Insurance

Finance problem question concerning payments on a car.?

You are thinking of buying a used car that costs $6,000 and has an expected zero resale value at the end of 4 years. Both Bank of Montreal (BMO) and Toronto-Dominion Bank (TD) are offering special low-rate car loans to York students. BMO will loan you the $6,000 and charge you a 6% EAR and want the loan repaid in 48 equal monthly payments, with the first payment due at the end of the first month. TD will loan you the purchase price of the car at a 7% APR with the first payment also due at the end of the first month. The TD loan has also to be paid in full within 48 equal monthly payments. Your estimated costs of operating the car, including insurance, are $315.00 per month, payable at the start of each month. You currently have $19,000 in your investment account, which is earning 8%, compounded annually (your discount rate). (a) What is the monthly payment for the BMO loan? (4 marks) (b) What is the monthly payment for the TD loan? (4 marks) (c) Can you afford to buy the car if you choose the cheaper loan? (8 marks)

Public Comments

1. Try the links in http://www.freewebs.com/efinans/