1. You have two options to purchase a car. Your first option is to purchase the car at $26.200 and pay for it over 36 months with equal monthly payments at 1.9 % interest per year. The second option is for you to purchase the car immediately with cash at a rebate or discounted price lower than $25,000. C. a. Draw a cash flow diagram for the first option b. Using the appropriate compounding interest factor provided on the formula sheet, determine your monthly payments Draw the cash flow diagram that will enable you to determine the equivalent present cost of the total loan repayments you made in (b) above, if funds are presently earning 5 % annual interest compounded annually d. Using the appropriate compounding interest factor provided on the formula sheet, determine the equivalent present cost of the total loan repayments. e. Which of the two options will you choose and why?

1. You have two options to purchase a car. Your first option is to purchase the car at $26.200 and pay for it over 36 months with equal monthly payments at 1.9 % interest per year. The second option is for you to purchase the car immediately with cash at a rebate or discounted price lower than $25,000. C. a. Draw a cash flow diagram for the first option b. Using the appropriate compounding interest factor provided on the formula sheet, determine your monthly payments Draw the cash flow diagram that will enable you to determine the equivalent present cost of the total loan repayments you made in (b) above, if funds are presently earning 5 % annual interest compounded annually d. Using the appropriate compounding interest factor provided on the formula sheet, determine the equivalent present cost of the total loan repayments. e. Which of the two options will you choose and why?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You plan to buy a new car. The car dealer offers the following two options: Option A: Pay $12,000 each year for 3 years Option B: Pay $1,000 each month for 3 years Your friend recommends option A. Do you agree? (ps: this is the full question that without interest rate numbers; plz use present value method thx)
Please advise on these time value of money practice problems. How would you solve these using a financial calculator? What values would you enter for N, I/YR, PV, PMT, and FV ? a) Calculate the PV when you plan to receive $5,000 in 5 years with a 10% discount rate. b) Calculate the FV of a $10,000 deposit today for 10 years @ 5%. c) What is the PV of receiving $2,500 for each of the next 5 years with a 10% discount rate?
You are considering two investment options. In option A, you have to invest RM4000 now and RM1000 three years from now. In option B. you have to invest RM2500 now, RM1500 a year from now, and RM1000 three years from now. In both options, you will receive four annual income of RM3000 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the present worth criterion, assuming 13% interest? Based on conventional payback period method, choose either (A/B/Both) PW Option A PW Option B Based on PW analysis method, choose Option (A or B) Submit :A : 9290.7 : 6602.9 :A Format Format Format Format
An investment will generate $12,000 a year for 30 years. If you can earn 12 percent on your funds and the investment costs $100,000, calculate the present value of investment. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it?-Select-YesNoItem 2 Calculate the present value of investment, if you could earn only 9 percent. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it in this case?
You have an opportunity to make an investment that will pay $ 300 at the end of the first year, $ 100 at the end of the second year, $ 200 at the end of the third year, $ 400 at the end of the fourth year, and $500 at the end of the fifth year. a. Find the present value if the interest rate is 9 percent. (Hint: You can simply bring each cash flow back to the present and then add them up. Another way to work this problem is to either use the =NPV function in Excel or to use your CF key on a financial calculator —but you'll want to check your calculator's manual before you use this key. Keep in mind that with the =NPV function in Excel, there is no initial outlay. That is, all this function does is bring all the future cash flows back to the present. With a financial calculator, you should keep in mind that CF0 is the initial outlay or cash flow at time 0, and, because there is no cash flow at time 0, CF0 =0.) b. What would happen to the…
Provide step by step manula solution, formula, and diagram. An investor have a projected surplus income of P1000 per year which he plans to place in a bank which offers an interest of 18% per annum for time deposit over 5 years. Compute how much shall the investor collect at the end of 13 years
Give me right solution according to the question options also given A person deposits $150 per month into a savings account for 2 years. if $75 is withdrawn in months 5,7 and 8 (in addition to the deposits), construct the cash flow diagram to determine how much will be in the account after 2 years at i=8% per year, compound quarterly. Assume there is no interperiod interest. A. $ 2,045 B. $3609 C. $3090 D. $4050
You’re considering purchasing an apartment for $200,000. You believe that you can earn an initial rental income of $12,000 per year on it and that the rental income will grow at 3% per year. You also believe that you can sell the apartment for $225,000 after 5 years. The IRR calculation is shown below:
If you could solve option 5 with the formulas please Option 5: Half the required money is taken out of an investment account that pays monthly interest at a 3% annual rate. The rest of the money is borrowed from a bank at a 4% annual interest rate, should payback within 3 years in equal monthly payments. Find the future value of the money taken from the investment account at the end of the shop development and periodic payments to the bank. Calculate Cumulative interest and principal payments.
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Use the savings plan formula to answer the following question. You put $300 per month in an investment plan that pays an APR of 4.5%. How much money will you have after 28 years? Compare this amount to the total deposits made over the time period. After 28 years the investment plan will contain S (Do not round until the final answer. Then round to the nearest cent as needed.) The total deposits made over the time period is $ (Type a whole number.)
Assume that at the beginning of the year, you purchase an investment for $6,300 that pays $130 annual income. Also assume the investment's value has increased to $6,900 by the end of the year. a. What is the rate of return for this investment? Note: Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places. Rate of return % b. Is the rate of return a positive or a negative number? Positive Negative

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