A local company is selling an LG 55" OLED Smart TV for $2327 cash or you can rent-to-own for $232.70 per month for 18 months. If you took the 18-month rent-to-own offer, what would be the APR of your loan? You must draw a correct cash flow diagram to get full credit for this problem and you must show your work. Excel solutions don’t count.

A local company is selling an LG 55" OLED Smart TV for $2327 cash or you can rent-to-own for $232.70 per month for 18 months. If you took the 18-month rent-to-own offer, what would be the APR of your loan? You must draw a correct cash flow diagram to get full credit for this problem and you must show your work. Excel solutions don’t count.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 4PB: Chang Consulting. Inc., has a $15,000 overdue debt with Supplier No. 1. The company is low on cash,...

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Chang Consulting. Inc., has a $15,000 overdue debt with Supplier No. 1. The company is low on cash, with only $4,000 in the checking account and does not want to borrow any more cash. Supplier No. 1 agrees to settle the account in one of two ways: Option 1: Pay $4,000 now and $18.750 when some large projects are finished, two years from today. Option 2: Pay $25,000 three years from today, when even larger projects are finished. Assuming that the only factor in the decision is the cost of money (8%), which option should Clary choose?
2. You bought a house for $200,000. You also had to pay $13,460 in taxes and fees. Interest rate is 6%. The down payment was $15,000. The remaining balance is financed for 15 years. If you are only making yearly payments, how much will each payment be? Please do not use excel. draw cashflow diagram if possible.
7. You borrow $100,000 for the purchase of an automation system in your company. The payments at 6% is $7,265 per year for 30 years. You decide that you can afford to pay $9,000 every year instead of $7,265. How long will it take to pay off this loan? Do not use excel, please work the problem out, and include cashflow diagram if possible.
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