You may borrow or lend at a 5% interest rate, which you expect to remain stable forever. Make a choice and explain your answer in each scenario below. a. You may receive a gift of $500 today or a gift of $540 next year. b. You may receive gift of $100 today or a four-year loan of $500 without interest. c. You may receive a $350 rebate on an $8000 car or one year of no-interest financing on the full price of the car.

You may borrow or lend at a 5% interest rate, which you expect to remain stable forever. Make a choice and explain your answer in each scenario below. a. You may receive a gift of $500 today or a gift of $540 next year. b. You may receive gift of $100 today or a four-year loan of $500 without interest. c. You may receive a $350 rebate on an $8000 car or one year of no-interest financing on the full price of the car.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter6: Saving And Investing

Section: Chapter Questions

Problem 20AA

See similar textbooks

Similar questions

Give typing answer with explanation and conclusion Michael can afford car payments of $275 a month for 72 months. The bank will lend him this money at 11.40 percent APR. How much can Michael borrow?
3. You are looking to retire in 35 years and your company has a 401K plan that has a 5.2% annual return. You deposit $400 a month from your paycheck into the account. Calculate the amount of your retirement when you retire.
35. If you know that you can afford a $500 per month car payment for the next 48 months, the interest rate is positive and you have found a car dealer who will agree to a zero down payment you will a. Be able to afford a $25,000 car (which is more than $500x48) b. Be able to afford a $24,000 car (which is exactly $500x48) c. Be able to afford something less than a $24,000 car d. Be able to finance a more expensive car when the interest rate is high
You take out a loan of $12,000 to pay for a piece of equipment. You plan to repay the loan in 16 years. You can afford to pay a maximum of $1,100 each year. What interest rate would allow for you to pay off the entirely of the loan in equal payments?
could you show how to determine the bond's present value without a calculator?
What can be best said about a banker whose interest rate is 20% on a one-year loan worth $1000 today?
You are looking for a car to lease. Your income is $3,000 per month, and you know that you should not spend more than 20 percent of your income on a car payment. You have found four deals in the table below. options Location Monthly Rent Toyota Camry $400 Lincoln MKZ $660 Ford Fusion $380 BMW 740 $720 Instructions: In order to receive full credit, you must make a selection for each option. For the correct answer(s), click the box once to place a checkmark. For the incorrect answer(s), click the option twice to empty the box. Suppose you adhere to the 20 percent guideline but also receive a $100 monthly allowance from your parents towards your car payment, which option(s) fall within your budget? Group of answer choices Toyota Camry Lincoln MKZ Ford Fusion BMW 740
You decide to purchase a house and need a $160, 000 mortgage. You take out a loan from the bank that has an annual interest rate of 6%. What is the monthly payment to the bank to pay off the loan in 20 years? ( i need final answer only no need of all calculation)
how to calculate present value
Problem 3 An investor bought a discount bond with face value of $1,000 at the price of $870. The bond matures in three years. What is the rate of return? Problem 6 You lend $1,000 today. The borrower promises to return $1,500 in 8 years from now. What is the yield to maturity of this loan?
On November 4, you get a boat loan. Your first payment is due December 4. You write out your check on December 1, drop it in a mailbox on December 2, it gets postmarked on December 3, and the lender receives it on December 6. For how many days is interest calculated?
What will the value of spending be if you had $1300 in savings and $2250 in income?