A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of the purchase price in each of the ne years. If you pay the entire bill immediately, you can get a discount of 11% on the purchase price. Assume the product sells for $100 a-1. Calculate the present value of the payments if you can borrow or lend funds at an interest rate of 6 percent. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a-2 Which is a better deal? 0-1. Calculate the present value if the payments on the 4-year installment plan do not start for a full year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. 6-2. Which is a better deal? a-1. PV of installment plan a-2. Which is a better deal? b-1. PV of installment plan

A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of the purchase price in each of the ne years. If you pay the entire bill immediately, you can get a discount of 11% on the purchase price. Assume the product sells for $100 a-1. Calculate the present value of the payments if you can borrow or lend funds at an interest rate of 6 percent. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a-2 Which is a better deal? 0-1. Calculate the present value if the payments on the 4-year installment plan do not start for a full year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. 6-2. Which is a better deal? a-1. PV of installment plan a-2. Which is a better deal? b-1. PV of installment plan

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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Similar questions

A borrower takes out a 5/1 Hybrid ARM for $450,000 with an initial contract interest rate of 3.5%. The interest rate will adjust according to the 1 yr UST rate, plus a margin of 2%. At the first reset date, 1 yr UST is at 1%. What will the borrowers' monthly payment be immediately after the first reset? (State the payment as a positive number. Unless otherwise stated, you can assume 5/1 ARMs have a term of 30 years. Round your answer to 2 decimal places.)
Assume that you have a balance of $4200 on your Discover credit card and that you make no more charges. Assume that Discover charges 25% APR and that each month you make only the minimum payment of 2.2% of the balance. What will the balance be after 10 years? (Enter your answer rounded to the nearest cent.)
You are offered the following combinations of payments: Combination A: $3 today, $1.1 one year later and $3.63 two years later. Combination B: $7 today, zero one year later and zero two years later. You can borrow and lend at 10%. The present value of combination of A is $ You are offered the following combinations of payments: Combination A: $3 today, $1.1 one year later and $3.63 two years later. Combination B: $7 today, zero one year later and zero two years later. You can borrow and lend at 10%. The present value of combination of A is $ x . By choosing combination A, we can replicate combination B by take out a 1 year loan of $1 AND take out 2 year loan of $3 I want answers for both questions.
To borrow $3,400, you are offered an add-on interest loan at 9.6 percent with 12 monthly payments. Compute the 12 equal payments. Use the amount you borrowed and the monthly payments you computed to calculate the APR of the loan. Then, use that APR to compute the EAR of the loan. Note: Do not round intermediate calculations and round your final answer to 2 decimal places. Equal payment Effective annual rate
A store will give you a 2.25% discount on the cost of your purchase if you pay cash today. Otherwise, you will be billed the full price with payment due in 1 month. What is the implicit borrowing rate being paid by customers who choose to defer payment for the month?
You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of 3.9 percent per year, compounded monthly for the first six months, increasing thereafter to 18.8 percent per year, compounded monthly. Assuming you transfer the $19,000 balance from your existing credit card and make no subsequent payments, how much interest will you owe at the end of the first year? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Interest owed
You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of 1.8 percent per year, compounded monthly for the first six months, increasing thereafter to 17 percent compounded monthly. Assuming you transfer the $6,900 balance from your existing credit card and make no subsequent payments, how much interest will you owe at the end of the first year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
A store will give you a 5.00% discount on the cost of your purchase if you pay cash today. Otherwise, you will be billed the full price with payment due in 1 month. What is the implicit borrowing rate being paid by customers who choose to defer payment for the month?
You wish to buy a $10,900 dining room set. The furniture store offers you a 2-year loan with an APR of 7.2 percent. What are the monthly payments? (Do not round intermediate calculations and round your final answer to 2 decimal places.) How would the payment differ if you paid interest only? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
The bank offers you the following three options to pay back the loan from the previous question: I: To pay the interest of 6.00% annually II: To pay an interest of 0.49% monthly III: To pay an interest of 1.46% quarterly Which of these three options would be most beneficial for you? O All three options would be equally beneficial Option II ○ Option III Option I O Option II and Option III would be equally beneficial
A house price of $100,000 can be financed with two loans below with monthly payments. The total origination cost associated with these two loans is $2,000. Loan Amount Term (years) Interest Rate 1st loan $ 80,000 30 5% 2nd loan $ 10,000 30 7% Alternatively, the borrower can borrow one loan in the amount of $90,000 with origination cost of $1,500. What should the interest rate be on the $90,000, 30 years loan with monthly payments so that the borrower will be indifferent between these two alternatives? 4.28% 5.28% 6.28% 7.28%
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