Question 5: What is the cheapest way to drive a Lincoln?You consider leasing a Lincoln for 24 months. Two payment options: you caneither pay upfront $11,200 or choose 24 monthly installments of $539 [with firstpayment in a month of the lease date]. You can borrow/lend at 12% (monthlycompounding) from a bank. Should you prepay the lease or take the installmentplan? Use formula for sum of annuities. Think what is the per-period interest ratethat applies here.Now assume that you can borrow/lend at 18% (monthly compounding) from abank. Should you prepay the lease or take the installment plan?

Annuity is a series of equal periodic payments.With periodic payment (PMT), period (n) and monthly…

Answered: Question 5: What is the cheapest way to…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter17: Accounting For Notes And Interest

Section: Chapter Questions

Problem 1MYW

See similar textbooks

Similar questions

You need a car and decide to lease for 36 months. The original price is $20,000 and the trade value in 36 months, assuming you don't exceed the mileage allowance, is $5,000 (treat this as a future value). No down payment is required. If the interest rate is 9% APR compounded monthly, what is the lease payment? I need it witha solutuion $503.38 $5066.37 $5100.15 $510.67
Suppose that you decide to borrow $15,000 for a new car. You can select one of the following loans, each requiring regular monthly payments. Installment Loan A: three-year loan at 5.9% Installment Loan B: five-year loan at 4.8% P Use PMT = to complete parts (a) through (c) below. - nt 1- 1+ a. Find the monthly payments and the total interest for Loan A. The monthly payment for Loan A is $. (Do not round until the final answer. Then round to the nearest cent as needed.)
Suppose that you decide to borrow $13,000 for a new car. You can select one of the following loans, each requiring regular monthly payments. Installment Loan A: three-year loan at 6.3% Installment Loan B: five-year loan at 4.8% P. Use PMT = to complete parts (a) through (c) below. - nt 1- a. Find the monthly payments and the total interest for Loan A. The monthly payment for Loan A is $. (Do not round until the final answer. Then round to the nearest cent as needed.) The total interest for Loan A is $. (Round to the nearest cent as needed.) b. Find the monthly payments and the total interest for Loan B. The monthly payment for Loan B is $. (Do not round until the final answer. Then round to the nearest cent as needed.) The total interest for Loan B is $. (Round to the nearest cent as needed.) MacBook Air
Say you need to take out a loan for $1,500. There are two options for repayment: Option A: short-term 6% interest loan with a term of 1 year. Option B: 1-year simple interest amortized loan at 6% interest, with monthly payments. What is the lump sum payment plan for option A? And what is the monthly payment for option B? What formulas did you use and why?
You are leasing a new car that costs $89,950, and you will lease it for 3 years at 5.4%. The lease is structured as an annuity due. What will your monthly payment be? Question 4 options: $2,712 $2,554 $2,604 $2,848 $2,700
You are interested in leasing a car for $425 per month, due at the beginning of each month. Using an interest rate of 4% annually, what is the present worth of a one-year lease for this car? a) Slove using Annual Worth b) Solve using Internal Rate of Return Excel is preferred
Consider the following options for a $153,000 mortgage. Calculate the monthly payment and total closing costs for each option. Which option would Clearly explain why you chose the option that you chose. you choose? Option 1: a 30-year fixed-rate loan at 4.3% with $1500 closing cost and no points • Option 2: a 30-year fixed-rate loan at 3.8% with $1200 closing cost and 2 points
You are considering purchasing a new home. You will need to borrow $280,000 to purchase the home. A mortgage company offers you a 20-year fixed rate mortgage (240 months) at 9% APR (0.75% month). If you borrow the money from this mortgage company, your monthly mortgage payment will be closest to: O A. $2,015 В. $3,527 C. $4,030 D. $2,519
3. Lease vs Buy: You are considering whether to buy or lease a Jeep Wrangler. For a Wrangler priced at $29,540, if you purchase it you will have a payment of $6,024/year ($502/month) for five years (at 5 percent financing with $2,954 down). If you lease you will pay $3,300/year ($275/month) for five years, with a down payment of $1,200. Note that these are monthly payments but we will treat these as annual payments for the calculations to simplify (i.e., just use $6,024 for the purchase and $3,300 for the lease annually). At the end of five years, the Jeep will have a salvage value of $17,000. Also, assume that the down payment and first year payments are due today (i.e., time zero) so that the second year payment is due in one year, third year payment in two years, etc. (this is important for discounting). a. After 4 years, how much more will the purchase have cost than the lease (i.c., total nominal money paid out)? Consider the total costs without time value of money. b. Assuming a…
Compare the monthly payment and total payment for the following pairs of loan options. Assume that both loans are fixed rate and have the same closing costs. You need a $180,000 loan. Option 1: a 30-year loan at an APR of 7.5%. Option 2: a 15-year loan at an APR of 6.5%. Question content area bottom Part 1 Find the monthly payment for each option. The monthly payment for option 1 is $enter your response here. The monthly payment for option 2 is $enter your response here. (Do not round until the final answer. Then round to the nearest cent as needed.) Part 2 Find the total payment for each option. The total payment for option 1 is $enter your response here. The total payment for option 2 is $enter your response here. (Round to the nearest cent as needed.) Part 3 Compare the two options. Which appears to be the better option? A. Option 1 will always be the better option. B. Option 1 is the better option, but only if the borrower…
Alternative Calculation of Monthly Lease Payment: FV PV (1+ i)N 1 LP = 1 (1+i)N-A i + A where LP – monthly lease payment; PV – the present value of the future payments on the lease, including the residual value, i.e. it is a lease amount; FV – the future value of leased asset or its residual value; N- the lease term (number of months); A - the number of payments to be paid in advance (0,1,2,...); i- monthly interest rate (i = APR÷12). The formula presented above can be used for any payment frequency. Just be sure that N is the number of periods and į is the interest rate per period.
Suppose that you decide to borrow 13000 for a new car. You can select one of the following loans each requiring regular monthly payments. Installment loan A three-year loan at 5.9% Installment loan B five -year loan at 5.8% What would be the monthly payments for each loan and total interest for them also?

SEE MORE QUESTIONS

Recommended textbooks for you

College Accounting, Chapters 1-27

Accounting

ISBN:

9781337794756

Author:

HEINTZ, James A.

Publisher:

Cengage Learning,

College Accounting, Chapters 1-27

Accounting

ISBN:

9781337794756

Author:

HEINTZ, James A.

Publisher:

Cengage Learning,

SEE MORE TEXTBOOKS