Plz answer correctly in 20 mints very urgent plz Question:1. Suppose you need a $10,000 loan fromthe car dealer to buy the car you wish.The dealer offers you a choice of threeways to pay back the loan1. $250 a month for 4 years2. $1000 every 6 months for 6 years..3. No payments for the first year, then$600 quarterly for 5 yearsNotice that the total payments amountto the same in each case: $12,000. Butthe deals are not equally good. Which isthe best deal in terms of the impliedinterest rate? (Specify both the nominaland the effective rate for eacharrangement)1. nominal:2. nominal:3. nominal:effective:effective:effective:

To Find: Nominal Interest rate Effective interest rate

Answered: 1. Suppose you need a $10,000 loan from…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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Similar questions

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)?
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the year
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?

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1. Suppose you need a $10,000 loan from the car dealer to buy the car you wish. The dealer offers you a choice of three ways to pay back the loan 1. $250 a month for 4 years 2. $1000 every 6 months for 6 years..