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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A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of the purchase price in each of the next 3 years. If you pay the entire bill immediately, you can take a 10% discount from 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 5 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.) a-2 Which is a better deal? b-1. Calculate the present value if the payments on the 4-year installment plan do not start for a full year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b-2. Which is a better deal?
A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of the purchase price in each of the next 3 years. If you pay the entire bill immediately, you can get a discount of 12% 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 7 percent.
A store offers two payment plans. Under the installment plan, you pay 20% down and 20% of the purchase price in each of the next 3 years. If you pay the entire bill immediately, you can take a 10% discount from the purchase price. a. Which is the better deal if the interest rate is 6.0%? Installment Plan O Immediate Plan b. How will your answer change if the four payments on the instalments do not start until the end of the year? O Installment Plan O Immediate Plan
A store will give you a 1.75% 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? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal points. Effective Annual Rate: ___%
A store will give you a 1.00% 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? Note: Do not round Intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Effective annual rate %
A store will give you a 4.50% 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? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
To borrow $2,400, you are offered an add-on interest loan at 10.4 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. %
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.)
Calculate the APR of a loan for $10,025, including loan fees of $310, at 11% for 6 years. (Do not round intermediate calculations. Round your answer to the nearest tenth percent.) APR If you are trying to build credit by using a credit card, each time you make a purchase with the credit card, deduct that amount from your checking account. That way, when your credit card bill is due, you will have enough to pay the credit card off in full. Kathy Lehne is going to start doing this. She plans on paying her credit card bill in full this month. How much does she owe with a 6% APR and the following transactions? (Round your answer to the nearest cent.) 31-day billing cycle 10/1 Previous balance 10/3 Credit 10/12 Charge: King Soopers 10/15 Payment 10/25 Charge: Delta 10/30 Charge: Holiday Fun $1,158 $ 85 cr. 142 250 cr. 315 55 Answer is not complete. Amount owed Calculate (a) the amount financed, (b) the total finance charge, and (c) APR by formula. (Do not round intermediate calculations.…
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
Use PMT= HA to determine the regular payment amount, rounded to the nearest dollar. Your credit card has a balance of $4200 and an annual interest rate of 1% You decide to pay off the balance over three years. If there are no further purchases charged to the card, a. How much must you pay each month? b. How much total interest will you pay? a. The monthly payments are approximately $ (Do not round until the final answer. Then round to the nearest dollar as needed.) b. The total interest paid over 3 years is approximately $ (Round to the nearest dofar as needed.)
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?

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