Brainmass.com



 

 

1) You are in the process of purchasing a used min-van that will cost you $12,899.  The dealership is offering you either a $500 rebate (applied toward the purchase price) or 2.9% financing for 60 months (with payments made at the end of the month).  You have been pre-approved for an auto loan through your local credit union at an interest rate of 3.9% for 60 months.  Should you take the $500 rebate and finance through your credit union or forgo the rebate and finance through the dealership at the lower 2.9% APR?

 

 

Use the information for the question(s) below.

 

 

Two years ago you purchased a new home.  You financed your home for 30 years (with payments made at the end of the month) with a loan at 5.9% APR.  You monthly payments are $3103.29 and you have just made your 24th monthly payment on your home.

 

 

2) Assuming that you have made all of the first 24 payments on time, then how much interest have you paid over the first two years of your loan?

 

Use the information for the question(s) below.

 

Your firm needs to invest in a new delivery truck.  The life expectancy of the delivery truck is five years.  You can purchase a new delivery truck for an upfront cost of $200,000, or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4000 (paid at the end of each month).  Your firm can borrow at 6% APR with quarterly compounding.

 

3)The effective annual rate on your firm's borrowings is closest to:

A)6.00%

B)6.24%

C)6.17%

D)6.14%

 

 

 

 

4)The monthly discount rate that you should use to evaluate the truck lease is closest to:

A)0.487%

B)0.512%

C)0.498%

D)0.500%

5)Your boss asked you to assess the firms technology needs. The firm currently has 200 computers and 30 laptops. After a thorough evaluation you have determined to replace 100 computers and 15 laptops every 4 years. You have 2 options: purchase 100 computer and 15 laptops for an upfront cost of $800 per computer and $1000 per laptop, or you can lease the computers for $200 per computer and $250 per laptop paid at the end of each month. Your boss stated that the firm can borrow at an interest rate of 6% with semiannual compounding. Should the firm purchase the computers and laptops or lease the equipment.

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download