4. You have decided to buy a car, the price of the car is $18,000. The car dealer presents you with two choices: (A) Purchase the car for cash and receive $2000 instant cash rebate - your out of pocket expense is $16,000 today. (B) Purchase the car for $18,000 with zero percent interest 36-month loan with monthly payments. Market interest rate is 4%. Which option above is cheaper? How much do you save?

4. You have decided to buy a car, the price of the car is $18,000. The car dealer presents you with two choices: (A) Purchase the car for cash and receive $2000 instant cash rebate - your out of pocket expense is $16,000 today. (B) Purchase the car for $18,000 with zero percent interest 36-month loan with monthly payments. Market interest rate is 4%. Which option above is cheaper? How much do you save?

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

See similar textbooks

Similar questions

Your old car costs you $300per month in gas and repairs. If you replace it, you could sell the old car immediately for $2,000. To buy a new car that would last seven years, you need to pay out $12,200 immediately. Gas and repairs would cost you only $100 per month on the new car. Interest is 9%compounded monthly. Should you buy a new car (Alternative 1) or keep your old car (Alternative 2)? Compute the net present value of each alternative and determine which alternative should be accepted or rejected according to the net present value criterion. What will be the net present value for Alternative 1 (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.) What will be the net present value for Alternative 2. (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.) What will be the preferred alternative.
Quantitative Problem: You need $18,000 to purchase a useel car. I Your wealthy uncle is willing to lend you the money as an amortized loan. He would like. would like you to make annual payments for 4 years with the first payment to be made one year from today. He requires on 8% anual return. a) What will be your amual loan payments? Do not round intermediate calculations. Round your answer to the nearest cent. b) How much of your payment will be first applied to interest and to principal repayment? Do not round intermediate calculations. Round to the nearest cent. your answers Interest Principal repayment m
You want to buy a car. A dealership in town has the SUV you want to buy for $22,510. Your first financing option is to make a down payment of $2500 and finance the rest at 2.99% APR for 72 months. How much will you be financing? $ How much will your monthly payments be under this financing option? (Round to the nearest dollar.) $ How much total money will you pay for the SUV at the end of the 72 months under this financing option? (Don't forget to include your down payment in this total amount.) $
Suppose that you are thinking about buying a car and have narrowed down your choices to two options. The new-car option: The new car costs $26,000 and can be financed with a four-year loan at 7.75%. The used-car option: A three-year old model of the same car costs $16,000 and can be financed with a four-year loan at 5.28%. What is the difference in monthly payments between financing the new car and financing the used car? (Round to the nearest cent as needed.)
You need a loan of $110,000 to buy a home. Calculate your monthly payments and total closing costs for each choice below. = Choice 1: 15-year fixed rate at 4% with closing costs of$1600 and no points. Choice 2: 15-year fixed rate at 3.5% with closing costs of$1600 and 3 points. What is the monthly payment for choice 1? $_______ (Do not round until the final answer. Then round to the nearest cent as needed.) What is the monthly payment for choice 2? $_____ (Do not round until the final answer. Then round to the nearest cent as needed.) What is the total closing cost for choice 1? $_____ What is the total closing cost for choice 2? $_____ Why might choice 1 be the better choice? A.The monthly payment is lower. B. The closing costs are lower. C. The monthly payment is higher. D. The closing costs are higher. Why might choice 2 be the better choice? A. The closing costs are lower. B. The monthly payment is lower C. The monthly payment is higher. D. The closing…
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)
You have decided to purchase a new car. The car costs $27,500. The dealer is offering to finance the car for 6 years at a rate 8.75%. How much would your monthly payment be? Question 3 options: $492 $495 $504 $518 $511
Please solve using Excel and show formulas. You have decided to buy a car with price tag of $60,000 but you are able to negotiate the price down to $58,000. You have $5,000 saved, so you need to borrow $53,000 in a 5-year loan from your bank (your bank offers lower rates than the auto-dealer) at a 4.5% APR (annual rate). How much will you owe to the bank after 3 years?
You went to the car dealer to lease a car. The car is valued at $30,000 and you can drive away without putting any money down. The dealer offers you a 5 year lease with a $5,000 residual payment at the end if you want to buy the car. Assuming monthly payments of $508.32, what is the implied APR? Your answer should be close to a round number. Use a % symbol and round to the nearest 1 decimal point.....3.0% would be the form of a correct answer.
2.53. You have bought a car. The car dealer offers two payment plans: (A) Make 48 monthly payments of $130 each, or (B) Make 36 payments of $165 each. If the time value of money is 12% per year, which plan is cheaper for you?
3
You have saved $5,000 for a down payment on a new car. The largest monthly payment you can afford is $500. The loan will have an 11% APR based on end-of-month payments. a. What is the most expensive car you can afford if you finance it for 48 months? Do not round intermediate calculations. Round your answer to the nearest cent. b. What is the most expensive car you can afford if you finance it for 60 months? Do not round intermediate calculations. Round your answer to the nearest cent.

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS