Joe is getting ready to buy a car. He has $24,000 in investments earning 4.8% annually. The car also costs $24,000. If he doesn't pay cash for the car, Joe can get a loan at 4.3% interest for 5 years. The loan is structured so that Joe pays one balloon payment at the end of 5 years. The balloon payment includes the principal plus all interest accrued over 5 years. If Joe takes the loan will he have enough money available from his investments to make the balloon payment? How much will he be short/have to spare?
+118723 To answer this I woulod have to make a lot of assumptions.
Is the loan simple or compound interest? If it is compound then how often is it accrued and how often is at added?
How often is the interest on the investment account accrued and how often is it added.
I suppose it is fair to assume that the nominal rate of interest is 4.3% per annum but it does not say so int the question!
