A firm can lease a truck for 4 years at a cost of $47,000 annually. It can instead buy a truck at a cost of $97,000, with annual maintenance expenses of $27,000. The truck will be sold at the end of 4 years for $37,000. a. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 10% ? (Do not round intermec calculations. Round your answer to 2 decimal places.) Equivalent annual cost

Compare the cost of the following leasing agreement with the finance charge on a loan for the same time period. The price of the car is $25,000, and its projected residual value at the end of five years is $10,000. Monthly payment $450 Capital cost reduction $1,700 Disposition charge $400 Other things being equal, one would want to finance this car rather than take this lease if the finance cost were less than Group of answer choices $14, 100. $15,500. $12,900. $400.

a.  Renting a machine will need monthly payments of $6,000 for the next 5 years (i.e., at t = 1, 2, …, 60). However,if we choose to buy the machine today,which is (t = 0) will cost $320,000. Assume the machine's value is zero after 5 years. It is   possible to borrow and lend at a semi-annually compounded interest rate of 6% (APR). Would it be better to buy or to lease?  Explain.      b.We are currently at year 0. It is worthy to note that there is a perpetuity that pays $250 at the end of each odd year and $150 at  the end of each even year. The term structure is flat at 10% per year. Evaluate the present value of this perpetuity.     c.Assume the CAPM is valid.The return on asset ABC is perfectly correlated with the return on market portfolio. Your friend  makes the following statetment: a portfolio that had a dollar invested and  at the same time,shorting one dollar of the market portfolio will have no systematic risk. Comment on this and whether it is feasible.

Goran plans to buy a used truck that costs $15,000. The dealer requires a 20% down payment. The rest of the cost is financed with a 3-year, fixed-rate amortized auto loan at 5.5% annual interest with monthly payments. Complete the parts below. Do not round any intermediate computations. Round your final answers to the nearest cent if necessary. If necessary, refer to the list of financial formulas.

Assume the car can be purchased for 0% down for 60 months (in lieu of rebate). A car with a sticker price of $42,100 with factory and dealer rebates of $5,100. Hint: See Section 11.2, Example 5. (a) Find the monthly payment if financed for 60 months at 0% APR. (Round your answer to the nearest cent.)$ (b) Find the monthly payment if financed at 2.5% add-on interest for 60 months. (Round your answer to the nearest cent.)$ (c) Use the APR approximation formula to find the APR for part (b). (Round your answer to one decimal place.) %(d) State whether the 0% APR or the 2.5% add-on rate should be preferred. 0% APR2.5% add-on rate

3) You are purchasing a car and have the option to pay $25,000 in cash (upfront) OR assume a lease with end of the month payments of $399 for five years. By purchasing, you will receive an estimated residual value (or scrap value) by selling the car for $2,500 at the end of the 5 years. If interest is 2.7% compounded annually, which financing option would you prefer? (16.1 DCF)

You agree to purchase a car with a competitive value of $44,500 for the following loan contract: Purchase the car for $44,250 with $2,000 down and borrow the remainder over 5 years with monthly payments based on a rate of interest of 6.6%.  Your market rate of return is 5.25%. How much value did you destroy with this purchase? (Round to dollars and cents; round the car payment to dollars and cents.)

You are trying to decide between two mobile phone carriers. Carrier A requires you to pay $195 for the phone and then monthly charges of $62 for 24 months. Carrier B wants you to pay $90 for the phone and monthly charges of $68 for 12 months. Assume you will keep replacing the phone after your contract expires. Your cost of capital is 4.4% APR, compounded monthly. Based on cost alone, which carrier should you choose? The EAA for plan A is $ (Round to the nearest cent.)

When purchasing a $100,000 house, a borrower is comparing two loan alternatives. The first loan is an 80% loan at 4% with monthly payments of $591.75 for 15 years. The second loan is 90% loan at 5% with monthly payments of $526.13 over 25 years. What is the incremental cost of borrowing the extra money assuming the loan will be held for the full term? O 6.50% O 13.21% O 7.20% O 13.70%