Please answer fast i give you upvote. You have the opportunity to make a one-time sale if you will give a new customer 30days to pay. You suspect that there is a 50 percent chance that this person will neverpay you. The sales price of the item the customer wants to buy is $325. Your variablecost on that item is $219 and your monthly interest rate is 1 percent. Youcredit because the net present value of the sale isgrantshould; $105should; $109should not; -$58should not; -$47should not; -$33----

Net Present Value (NPV) is a financial concept widely used in investment analysis and capital…

Answered: cost on that item is $219 and your…

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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3.You have the opportunity to make a one-time sale if you will give a new customer 30days to pay. You suspect there is a 15 percent chance this person will never pay you. The sales price of the item the customer wants to buy is $289. Your variable cost on that item is $156 and your monthly interest rate is 1.75percent. Should you grant credit to this customer? Why or why not?
Supppose you lend a friend $100 on January 1st, and in return she offers to pay you back $10 at the start of each month (including this month, for some weird reason) for one year (the last payment is January 1st of the next year). What is the present value of this deal if you assume a market rate of 5% APR compounding monthly? Is the present value worth more than the $100 you leant her? .
Suppose you would like to purchase a new mustang GT. The sticker price of the mustang you want is $40000. The dealer is able to give you an APR of 4% for 5 years. How much will your monthly payments be?How much will you have paid in interest once the loan is paid off?
You have the following choice: You can receive $1,000 today or $1,100 in one year. The annual interest rate is 8%. Which should you choose? a.1,000 today b.1,100 in one year c. There is not enough information to choose d. Neither. You don't want or need the money
Assume that you wish to trade in your old car and buy a new car. The new car has a list price of $26,983.54 and you have been offered a 6 yr (72 months) car loan at a nominal annual interest rate of 3.84% (monthly compounding). And assume u want ur monthly payments to be no more than $400/month & will walk away if higher. Determine the min trade in that must be offered on ur old car to get u to buy the new one.
You wish to buy a $10,000 dining room set. The furniture store offers you a three-year loan with an 11 percent APR. What are the monthly payments? How would the payment differ if you paid interest only? What would the consequences of such a decision be?
You purchased a 270-day $1,000,000 banker's acceptance (BA) six months ago at a discount rate of 6.75%. You sell it today, with 90 days remaining to maturity, at a discount rate of 5.95%. a) What is your rate of return? Use 360-day to annualize. b) What 90-day discount rate when selling the BA today will yield a rate of return of 10% instead of the one obtained in question (a)? c) Explain why a BA is conisdered an off-balance sheet item?
Suppose that after buying a new car you decide to sell your old car to a friend. You accept a 290-day note for $6500 at 20% simple interest as payment. (Both simple and principal interest are paid at the end of 290 days.) 100 days later you find that you need the money and sell the note to a third party for $5500. What annual interest rate will the third party receive for the investment? Express your answer as a percentage, correct to three decimal places.
The Perpetual Life Insurance Company is trying to sell you an investment policy that will pay you and your heirs $19,500 per year forever. a. If the required return on this investment is 6.1 percent, how much will you pay for the policy? b. Suppose the Perpetual Life Insurance Company told you the policy costs $500,000. At what discount rate would this be a fair deal?
A broker wants to sell a customer an investment costing $100 with an expected payoff in one year of $108.6. The customer indicates that a 8.6 percent return is not very attractive. The broker responds by suggesting the customer borrow $80 for one year at 6.6 percent interest to help pay for the investment. a. What is the customer's expected return if she borrows the money? (Round your answer to 1 decimal place.) Customer's expected return %
Assume that you wish to trade in your old car and buy a new car. The new car has a list price of $31,500.00 and you have been offered a 6-year (72-month) car loan at a nominal annual interest rate of 3.84 percent (monthly compounding). Also assume that you want your monthly payments to be no more than $300 a month and will walk away from the deal if they are higher. Given this information, determine the minimum trade-in that the dealer must offer you on your old car in order to get you to buy the new car. O $11.592.97 O $10.926.03 $12,235.13 O $10,107.86 Ⓒ$9,666.48
Suppose a property you are seeking to purchase is valued at $200,000. You can take out a loan of 80 percent from the bank, which amortizes in 30 years. The current market interest rate is 7.35 percent. Suppose you can only afford a monthly payment of USD 900, but the seller is desperate to sell this property. The seller has already lowered the selling price to USD 180,000. What is the minimum amount of rebate that the seller should provide to you in order to make you purchase the property?

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cost on that item is $219 and your monthly interest rate is 1 percent. You the item the customer wants to buy is $325. Your variable person will never credit because the net present value of the sale is grant should: $105