A car valued at $21,500 can be purchased for 12% down and monthly payments of $450 for fouryears. What is the nominal rate of interest compounded annually? The nominal rate of interest is %compounded annually. (Round to two decimal places as needed.)

Nominal rate of return:The term "nominal rate" refers to the stated or advertised interest rate on…

Answered: A car valued at $21,500 can be…

Business

Finance

A car valued at $21,500 can be purchased for 12% down and monthly payments of $450 for four

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 3CE

See similar textbooks

Related questions

Q: 2. Expected return on two stocks for two particular market returns: Market Return Aggressive Stock…

A: The Capital Asset Pricing Model (CAPM) provides a framework for calculating expected returns based…

Q: You are investing in a share of stock. The share just paid a dividend of $7.46. The dividend has…

A: Recently paid dividend (D0) = $7.46Growth rate (g) = 5.26% or 0.0526Required rate of return (r) =…

Q: Suppose you want to buy a $453,806 home. You can put $90,000 down and can finance at 4.1% APR…

A: initially, we decide on the advanced sum deducting the initial investment from the cost of the…

Q: Problem 2-7 Answer the following questions based on the information in the table. Assume a tax rate…

A: The return on equity is the financial ratio that evaluates the return of the company relative the…

Q: A stock investment generated the following annual (total) returns over these 3 years: • 2015: 20% •…

A: The geometric average return is a method of calculating the average rate of return on an investment…

Q: Langford ��. issued 14 -year bonds a year ago at a coupon fate of 7.2%. The bonds make semiannual…

A: The objective of this question is to calculate the current price of a bond issued by Langford Co.…

Q: 9. A bond has a time-to-maturity of 8 years, a coupon rate of 5%, is currently selling for $1021.35.…

A: The objective of this question is to calculate the yield of a bond given its time-to-maturity,…

Q: Diversification will reduce risk is securities returns are negatively correlated. TRUE FALSE

A: Diversification can reduce risk if securities have negative correlations because when one security's…

Q: You are looking at a one-year loan of $13,500. The interest rate is quoted as 8.7 percent plus two…

A: Point on a loan:One point implies one percentage of the loan amount. As it is payable upfront, it…

Q: A20-29 EPS, Cascade (LO 20-2, 20-3, 20-4) Ashante Sports Collections Ltd. (ASCL) ended 20X5 with…

A: EPS stands for Earnings Per Share which states that how much amount the business makes for every…

Q: Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds…

A: After tax cost of debt of each bond can be computed by calculating effective interest of the each…

Q: Miller borrows $370,000 to be paid off in four years. The loan payments are semiannual with the…

A: Principal loan amount (P) = $370,000Semiannual interest rate (r) = 0.04 (i.e. 0.08 / 2)Semiannual…

Q: For each of the following, compute the present value: (Do not round intermediate calculations and…

A: Present Value (PV) is the present worth of an amount to be received in future, taking into account…

Q: A loan of $1420 taken out on June 7 requires three payments. The first payment is due on July 7. The…

A: Periodic payment refers to an amount that is paid every period for the repayment of a loan amount…

Q: ABC's preferred stock has a par value of $100, a dividends rate of 5%, and a market price of $155;…

A: In case of paymentThe first payment is done to the debt holders of the company.So when company pays…

Q: Scott Corp. is a manufacturing firm. Scott Corp.'s current value of operations, including debt and…

A: Here, Face Value of Outstanding Debt (Strike Price) $ 14,000,000.00Value of Firm (Stock Price) $…

Q: Part 6 Attempt 4/5 for 7 pts. What is the present value of the cash flow from assets from year 2 to…

A: To calculate the present value of cash flows from assets from year 2 to 20, you can use the formula…

Q: You own a home that was recently appraised for $330,000. The balance on your existing mortgage is…

A: Maximum loan amount = 70% of the appraised valueAppraised value of the home is given as…

Q: Problem 7-25 Bond Prices and Interest Rate Changes (LG7-5) A 6.55 percent coupon bond with 15 years…

A: If Stated rate of interest is more than market rate of interest than selling price of Bonds will be…

Q: A suburban taxi company is considering buying taxis with diesel engines instead of gasoline engines.…

A: EUAC is the equivalent annual uniform cost which is equivalent to all cost that are applicable…

Q: You have a balance of $12,000 for your tuition on your American Express credit card. Assume that you…

A: Minimum payment refers to the amount that remains at the end of each month for maintaining the…

Q: Rare Agri-Products Ltd. is considering a new project with a projectedlife of seven (7) years. The…

A: The objective of the question is to calculate the appropriate rate for discounting the cash flows of…

Q: Consider the single-index model. The alpha of a stock is 2.00%. The return on the market index is…

A: Alpha of the stock = 2%Return on market (RM) = 12%Risk-free rate of return (RF) = 5.5%Actual return…

Q: Your brother plans to retire in 15 years. He currently has a deposit of $300,000, and think he will…

A: The required interest rate to reach the goal is calculated using Rate function in excel using the…

Q: You run a construction firm. You have just won a contract to build a government office complex.…

A: The value of NPV is given in million The NPV of the opportunity cost is $3.63 million

Q: Suppose a ten-year, $ 1 comma 000$1,000 bond with an 8.9 % 8.9% coupon rate and semiannual coupons…

A: Bonds are financial instruments through which corporations, governments, and other entities borrow…

Q: 10. Fred creates a loan agency. They will finance elite vehicles to UBER drivers. Fred explains his…

A: In a world where transportation needs are rapidly evolving, Fred saw an opportunity to bridge the…

Q: (please correct and incorrect option explain and correct answer this question) Match the following…

A: Lenders evaluate borrowers' creditworthiness and the risk of a loan through a number of processes…

Q: Using the following information, what is the cost to lease a car? (Assume there are no charges for…

A: Variables in the question:Monthly lease payment=$300 per month for a five year leaseOpportunity cost…

Q: Year 0 $500 Year 1 $2,000 Year 2 $3,000 Year 3 $4,000 If the current market rate of interest is 8%,…

A: Future value of cash flow is the amount of deposit done and amount of interest accumulated over the…

Q: Use the following information to calculate the expected return and standard deviation of a portfolio…

A: The expected return is the return percent a company is expected to receive. The portfolio expected…

Q: A 20 year/$10, 000 loan with interest i = 9% is to repaid with 12 payments of X at the end of each…

A: To solve this problem, we first need to find the value of X, the annual payment for the first 12…

Q: Longer maturity bonds have low Blank 1 risk but high Blank 2 risk, while higher coupon bonds have a…

A: Bond duration is a measure of the sensitivity of a bond's price to changes in interest rates. It…

Q: A telephone call center uses two customer service representatives (CSRs) during the 8:30 a.m. to…

A: Therefore, the two CSRs can handle approximately 14 calls during the 8:30 a.m. to 9:00 a.m. time…

Q: You've collected the following information from your favorite financial website. 52-Week Price…

A: Dividend yield is a financial ratio that measures how much the company pays dividend in relation to…

Q: Portfolio Beta Your retirement fund consists of a $7,000 investment in each of 12 different common…

A: A Portfolio beta is a metric that measures the systematic risk or volatility of an investment…

Q: Use the savings plan formula to answer the following question. Your goal is to create a college fund…

A: Compound = Monthly = 12Interest Rate = r = 4 / 12 %Future Value = fv = $87,000Time = t = 15 * 12 =…

Q: Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.5% x…

A: For companies retirement planning is quite important and planning is based on number of years in…

Q: Required information Skip to question [The following information applies to the questions displayed…

A: Expected returnStandard deviationBond fund9%Bond fund27%Stock fund15%Stock fund36%Risk free…

Q: The common stock of the P.U.T.T. Corporation has been trading in a narrow price range for the past…

A: By using option trading, investors may benefit from a range of changes in the price of underlying…

Q: Your portfolio is comprised of 30% of stock X, 40% of stock Y, and 30% of stock Z. Stock X has a…

A: The concept of portfolio beta, a measure that expresses a portfolio's total risk relative to the…

Q: a. Compute the cost of capital for the individual components in the capital structure. Note: Do not…

A: The weighted average cost of capital is similar to calculating the average cost of all the capital…

Q: Last year, Dani maximized her TFSA contribution limit by contributing $30,000 to her TFSA. This…

A: The objective of the question is to calculate the total contribution limit for Dani's Tax-Free…

Q: Oberon, Inc. has a $45 million (face value) 8-year bond issue selling for 98 percent of par that…

A: Let the par value of each bond = $1000The selling price can be calculated as

Q: you are paying of a purchase made with a down payment of 50000 usd. you will pay the rest of 245000…

A: Interest Rate = (Total Interest / Principal) / (1 / Number of Periods) 100Principal= $245,000Total…

Q: Which of the following statements is correct? Credit spreads decrease with volatility Credit…

A: The correct statement is: "Credit spreads increase with volatility."And the factor that is not…

Q: Suppose that the current rates on 60- and 120 - day GICs are 5.50% and 5.75%, respectively. An…

A: Expectations theory refers to the theory in finance that states that the yields on future securities…

Q: You have been hired to value a new 25-year, callable, convertible bond. The bond has a 7.10 percent…

A: Bond refers to the financial instruments issued by the bank or financial institutions for the funds…

Q: Calculate the finance charge (in $) and the annual percentage rate for the installment loan by using…

A: Financial charges are the fees or charges on the loan amount for a given period of time. An APR is…

Q: You are the financial analyst for a tennis racket manufacturer. The company is considering using a…

A: NPV, or Net Present Value, serves as a financial tool to assess the profitability of an investment…

Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

A car valued at $21,500 can be purchased for 12% down and monthly payments of $450 for four
years. What is the nominal rate of interest compounded annually? The nominal rate of interest is %
compounded annually. (Round to two decimal places as needed.)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Calculation of nominal interest rate

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the end of four months? A. $2,600 B. $7,800 C. $137,800 D. $132,600
Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?
A car valued at $11,400 can be purchased for 10% down and end-of-month payments of $286.21 for three-and-a-half years. What is the nominal annual rate of interest compounded monthly?
You can buy a car for $6,998 with $798 down and payments of $164.51 each month for 48 months. what's the amount of interest, interest rate (rounded to two decimal places) and the APR (rounded to the nearest 10th of a percent)
If $5500 is deposited at the end of each quarter in an account that earns 5% compounded quarterly, after how many quarters will the account contain $90,000? (Round your answer UP to the nearest quarter.)