4-109. The longer a loan schedule lasts, the more 4-111. Suppose you owe $1,100 on your credit card. interest you will pay. To illustrate, a $20,000-car-loan The annual percentage rate (APR) is 18%, compounded at 9% APR (compounded monthly) for three years monthly. The credit card company says your minimum (36 monthly payments) will incur total interest of monthly payment is $19.80. (4.15) $2,896. But a $20,000 car loan at 9% APR over six a. If you make only this minimum payment, how years (72 payments) will have a total interest cost long will it take for you to repay the $1,100 balance of $5,920. (4.15) (assuming no more charges are made)? a. Verify that the difference in total interest of $3,024 is b. If you make the minimum payment plus $10 extra correct. each month (for a total of $29.80), how long will it take to repay the $1,100 balance? 4-112. Determine the annual equivalent amount over c. Compare the total interest paid in Part (a) with the 4 years for the following cash flow (CF) pattern. The total interest paid in Part (b). nominal interest rate is 10%, and it is compounded monthly. (4.15) EOY 0 1 2 3 CF -$7,500 $2,000 $14,000 $18,000 $4,000 4
