Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Answer Part A, B, B(i), B(ii), C of this textbook question that deals with the application of
(a) You have won a lottery worth $1,000,000. The amount will be paid to you in equal installments
over 20 years. If the interest rate is 10% compounded annually, how much will you be paid at
the end of each year?
b) You are planning to buy a car worth $20,000. Which of the two deals described below would
you choose, both with a 48-month term? (NB: estimate the monthly payment of each offer).
i) the dealer offers to take 10% off the price, then lend you the balance at an annual
percentage rate (APR) of 9%, monthly compounding.
ii) the dealer offers to lend you $20,000 (i.e. no discount) at an APR of 3%, monthly
compounding.
(C) You have just joined the investment banking firm of Todd & Co. They have offered you two
different salary arrangements. You can have $75,000 per year for the next two years, or you
can have $55,000 per year for the next two years, along with a $30,000 signing bonus today.
If the interest rate is 12% compounded monthly, which is a better offer? NB: first convert the
annual percentage rate of 12% to EAR and use the EAR as the discount rate.
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- Answer the given question with a proper explanation and step-by-step solution. Please provide the answer using the math tool otherwise I give the downvote. Financial Mathematics Please answer all parts of the question Suppose you will receive $50,000 in 10 years time.a) What is the discount factor assuming quarterly compounding at 7% interest rate?b) What is the present value?c) What happens to the present value if the payment was to occur in five years?d) What happens to the present value if the interest rate was 8% instead?arrow_forwardD3) You borrow $22947 to buy a car. You will have to repay this loan by making equal monthly payments for 15 years. The bank quoted an APR of 9%. How much is your monthly payment (in $ dollars)? $________.arrow_forwardWhat is the total amount Bae will have to repay for his $24 comma 19924,199 student loan if the interest rate is 66 percent over 1010 years? What is the total amount he would have to repay if the $24 comma 19924,199 was a grant instead of a loan? Note: Round intermediate computations to at least five (5) decimal places. Click on the table icon to view the Monthly Installment Loan Payment Factor (MILPF) table: LOADING... . Question content area bottom Part 1 The total amount Bae will have to repay for his student loans isarrow_forward
- Give typing answer with explanation and conclusion Assume you want to borrow $300,000 and have been presented with two options. The first option is a fully amortizing loan with an interest rate of 3% and $4000 of origination fees and points. The second option is an interest only loan with an interest rate of 4% and $5000 of origination fees and points. Both loans are for 30 years and have monthly payments. Further assume that if the borrower chooses the interest only loan, any money saved on the monthly payment can be invested with a projected return of 7%. Also assume that the proceeds from the investment will first be used to pay off any remaining balance on the loan. How much money will the investor have left at the end of 30 years after repaying the loan? Group of answer choices None, the investor will owe $12,373.42 $323,060.72 $22,063.08 $30,750.78arrow_forwardYou purchase a plot of land worth $54,000 to create a community garden. To do so, you secure a 10-year loan, charging 5.22% APR, compounded monthly, and requiring monthly payments of $505. (Assume the value of the land is still $54,000. Round each answer to the nearest dollar.) (a) Assuming that you put some money down, what was your original loan amount (in dollars)? X $ (b) What is the outstanding balance (in dollars) on your loan after making 4 years of payments? $ 170255.84 (c) How much equity (in dollars) do you have in the garden after 4 years? $ Xarrow_forward3. You are purchasing an annuity that will pay you 15,000 a year for 5 years, beginning in year 20. The rate of return on the annuity is 3.5%. What are you going to pay for the annuity today? colqmsx3 le охолова 4. You are purchasing a car from your grandparents. You agree to pay them $2000 today and $2000 per year for the next 3 years. If you assume an interest rate of 2%, what is the value of the car? noillum S.So undarrow_forward
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