Addie wants to buy a car that is available at two dealerships. The price of the car is the same at both dealerships. Sams Motors would let her make quarterly payments of $7,500.00 for 6 years at a quarterlyinterest rate of 4.24 percent. Her first payment to Sams Motors would be due immediately. If Bolden Cars would let her make equal monthly payments of $3,500.00 at a monthly interest rate of 1.56 percentand if her first payment to Bolden Cars would be in 1 month, then how many monthly payments would Addie need to make to Bolden Cars?17.90 (plus or minus 0.3 payments)O 47.21 (plus or minus 0.3 payments)46.15 (plus or minus 0.3 payments)17.58 (plus or minus 0.3 payments)17.63 (plus or minus 0.3 payments)

Present Value refers to the current value of the loan or mortgage amount if paid all at once on the…

Addie wants to buy a car that interest rate of 4.24 percent. and if her first payment to Bc O 17.90 (plus or minus 0.3 p O 47.21 (plus or minus 0.3 p 46.15 (plus or minus 0.3 p O 17.58 (plus or minus 0.3 p O 17.63 (plus or minus 0.3 p COO

Addie wants to buy a car that interest rate of 4.24 percent. and if her first payment to Bc O 17.90 (plus or minus 0.3 p O 47.21 (plus or minus 0.3 p 46.15 (plus or minus 0.3 p O 17.58 (plus or minus 0.3 p O 17.63 (plus or minus 0.3 p COO

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

See similar textbooks

Related questions

Q: 1 2 3 4 5 6 Algebraic solution: 7 8 9 10 A Expectations Theory 4-yr. Treasury security yield 6-yr.…

A: The expectations theory makes predictions about future short-term interest rates based on the…

Q: Renaissance Capital Group is considering allocating a limited amount of capital investment funds…

A: Capital budgeting refers to the process of evaluating and selecting long-term investment projects or…

Q: Revenues EBITDA Dep & Amort EBIT Interest Exp Taxable Income Taxes Net Income CAPEX Non-Cash Working…

A: Free cash flow (FCF) is a financial metric that measures the cash generated by a company's…

Q: Neverlever, Inc. Is trying to decide how best to finance a proposed P10 million capital investment.…

A: The ROE refers to the ratio of the bottom line to the equity employed by the company. It provides…

Q: ACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%),…

A: NPV net present value is the difference between present value of cash flow and initial investment of…

Q: Paper plates are shipped in boxes. Each box has 10 bags of plates. Each bag has 10 plates. Draw…

A: Each box having 10 bags and every bags having 10 plates. We required 180 paper plates so Each box…

Q: 23. Brendan practiced soccer for 12 hours on Monday, 1 hours on 3 Tuesday, 1 hours on Wednesday and…

A: The soccer practice time given are…

Q: What is the purpose of a budget in financial management? a) To record and report financial…

A: Financial management refers to the process of planning, organizing, directing, and controlling the…

Q: eBook Amount of investment Useful life Average rate of return. The following data are accumulated by…

A: Average annual income = Estimated total income over the useful life/Useful life

Q: Investment in each of these projects can be made more than once given the funds are available. The…

A: 1. NPV means Net present value . 2. NPV is a capital budgeting technique used for making investment…

Q: To save for retirement, Milagro put $300 each month into an ordinary annuity for 20 years. Interest…

A: It's important to consider interest rates when making financial decisions, as they can have…

Q: Suppose that every time a fund manager trades stock, transaction costs such as commissions and…

A: Rate of return is the amount expressed in terms of percentage which an investor expects from the…

Q: The maturity value of a $44000, 9%, 60-day note receivable dated July 3 is O $44000. O $51920. O…

A: Maturity value = Present value/issued price + interest accrued for 60 days

Q: A perpetuity-due with annual payments consists of 10 level payments of X followed by a series of…

A: A perpetuity is a kind of annuity. Perpetuity due is that perpetuity wherein the payment starts…

Q: why are the operating taxes in the FCF analysis calculating without taking into account the tax…

A: Interest paid on loans or debts is an expense for the company. Also these interests reduces the…

Q: Syna Corporation's 4-year bond currently yield 7.4%. The real risk-free rate of interest, k* is 2.7%…

A: The interest rate provided by a bond refers to the return it provides on the market assuming all the…

Q: KADS, Inc. has spent $440,000 on research to develop a new computer game. The firm is planning to…

A: Cash flow shows the amount of cash inflow and outflow from the company. The cash flow statement…

Q: Q.3. The following table gives data on four stocks: Stock Alpha A 1.1 B 1.3 C 2.3 D 0.5 Systematic…

A: The single index model refers to the method of finding a stock’s risk and return based on the fact…

Q: Compare the monthly payments and total loan costs for the following pairs of loan options. Assume…

A: Monthly Payment on Loan: This monthly payment is computed from the interest charged on the loan and…

Q: Shutterpics reported net income of $453 million in 2021 (tax rate 25%). The Company's capital…

A: Earning per share is a kind of ratio that is used to determine the company's profitability.…

Q: Which of the following forms part of Tier 1 of the capital requirements in Basel:

A: Under Basel, Tier 1 capital refers to the core capital of the bank.

Q: Leon and Heidi decided to invest $2,750 annually for only the first Nine years of their marriage.…

A: A sum's present value after it has increased with compound interest for a predetermined number of…

Q: Seatwork Suppose you invest Php 100,000 today to: ● ● After a year, ● Buy 40 PLDT stocks at Php…

A: Return on investment includes the dividend received during the holding period , interest received on…

Q: WellyWeta workshop is considering buying a machine that costs $545,000. The machine will be…

A: Here, Cost of Machine is $545,000 Life of Machine is 5 years Depreciation Method is Straight Line…

Q: rate. Four years ago, ZXY deposited $2,820 in an account that has earned and will earn 15.00 percent…

A: 1. Compound interest. F = A × ( 1+r)n Where, F =future value including compound interest. A =…

Q: Calculate the risk premium for each of the following rating classes of long-term securities,…

A: Given, Corporate Nominal interest rate = 4.92% Treasury rate (default free rate) = 4.52%

Q: Vinny borrowed $29,000 for 10 years at 11.6 percent compounded quarterly. What will the ending…

A: Loan Installment is that fixed amount which is paid by the borrower to his lender. It includes the…

Q: Consider two local banks. Bank A has 89 loans outstanding, each for $1.0 million, that it expects…

A: Expected returns are calculated by taking the product of the returns & the probability of their…

Q: characteristics similar to the firm's average project. Bellinger's WACC is 10%. 0 1 2 3 4 Project A…

A: The net present value (NPV) method estimates how much a potential project will contribute to…

Q: If you can spare $1,098 at moşt as monthly payment, how much mortgage can you afford (30 year at 3%…

A: Present value is the value of all the future cash flows at a present date when compounded for…

Q: If your portfolio is invested in 40% Alpha, 40% Beta, and 20% in Delta, what is the expected return…

A: …

Q: Wanda Maximoff has been asked to compare the YTM of a zero-coupon bond that is currently being sold…

A: Price of zero coupon bond can be calculated by the following formula price of a zero coupon…

Q: The expected return according to CAPM is: OA. 13.2% OB. 14.3% OC. 19.8 % OD. 18.6% OE 12.0% OF.…

A: Capital Asset Pricing Model (CAPM) provides the relation to determine the expected return on the…

Q: I thing your formula for pretax cost of debt is wrong

A: Data given: Description First Bond Second Bond Bond Face Value ($) 80000000 45000000 Coupon…

Q: The EIC analysis means that, as a portfolio manager, you should: a. define your expectations about…

A: The correct option is c. Define your expectations about the business cycle first, choose the…

Q: A loan is to be repaid by an annuity payable monthly in arrears over a 5-year period. The annuity…

A: A repayment schedule, also known as an amortization schedule or loan repayment schedule, is a table…

Q: Use the Continuous Compound Interest I information above to answer this question. If $11,413 is is…

A: Future Value = Present Value (1 + R100)^NFuture Value = 11413 ( 1 + 2.30100)^10Future Value = 11413…

Q: Internal rate of return Product A 26.4 Product B 24,8

A: IRR is the internal rate of return that makes the sum of the present values of future cash flows to…

Q: A short-term loan of £5,000 is repayable in 25 days at a simple rate of interest of 6% p.a. Assuming…

A: Simple interest is a method in which the interest earned on the principal does not earn interest…

Q: QUESTION 3 A firm has sales of $4.5 million, and 12 percent of the sales are for cash. The year-end…

A: Total sales=$4,500,000 Cash sales=12% of Total sales Accounts receivable balance=$575,000 Required:…

Q: Bramble Corporation had net credit sales of $14100000 and cost of goods sold of $9370000 for the…

A: Here, Net Credit Sales is $14100000 Cost of Goods Sold is $9370000 Average Inventory is $1171250

Q: Calculate the missing information for the purchase. Sales Tax Rate Item Book Selling Price (in $)…

A: Purchase price after sales tax Purchase price = Selling Price *(1+r)

Q: Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net…

A: Data given: Reported Forecast Horizon Period Terminal Period Particulars 2018 2019 2020 2021…

Q: Using this table as needed, calculate the required information for the mortgage. Term of Loan…

A: Monthly payment refers to an amount that is being paid at every period for the repayment of loan…

Q: T/F: The acid-test ratio measures a company's liquidity by excluding inventory from current assets.

A: The given statement is True The acid-test ratio, also known as the quick ratio, is a financial…

Q: Vick incorporated sold bonds on January 1, 2005. The bonds were 15 year bonds with a 4% coupon. The…

A: Period of bonds = 15 years Coupon rate = 4% Market interest rate = 5% Terminal value = 1000

Q: The actual cost of a material is $2.33 per produced unit. A Six sigma team develop a productivity…

A: Internal rate of return refers to the method of capital budgeting used for computing the minimum…

Q: You would like to be holding a protective put position on the stock of XYZ Co. to lock in a…

A: Put option is one of the options which gives the holder the right to sell the assets underlying the…

Q: On January 1, Ozero, Inc. issued a 20-year monthly bond with a face value of $1,285,000 that pays…

A: Bond period = 20 years Face value = $1,285,000 Coupon rate = 4% Interest rate = 5% Payment frequency…

Q: Estimating Share Value Using the DCF Model Following are forecasts of Target Corporation's sales,…

A: Discounted cash flow method is one in which all the expected free cash flows of the company is…

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

Addie wants to buy a car that is available at two dealerships. The price of the car is the same at both dealerships. Sams Motors would let her make quarterly payments of $7,500.00 for 6 years at a quarterly
interest rate of 4.24 percent. Her first payment to Sams Motors would be due immediately. If Bolden Cars would let her make equal monthly payments of $3,500.00 at a monthly interest rate of 1.56 percent
and if her first payment to Bolden Cars would be in 1 month, then how many monthly payments would Addie need to make to Bolden Cars?
17.90 (plus or minus 0.3 payments)
O 47.21 (plus or minus 0.3 payments)
46.15 (plus or minus 0.3 payments)
17.58 (plus or minus 0.3 payments)
17.63 (plus or minus 0.3 payments)

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 to the Present value and Monthly Payments

VIEW

Step 2: Calculation of No. of Monthly Payments

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

Michiko and Saul are planning to attend the same university next year. The university estimates tuition, books, fees, and living costs to be 12,000 per year. Michikos father has agreed to give her the 12,000 she needs to attend the university. Saul has obtained a job at the university that will pay him 14,000 per year. After discussing their respective arrangements, Michiko figures that Saul will be better off than she will. What, if anything, is wrong with Michikos thinking?
Helen is buying a $12,375 car with a $3000 down payment, followed by 36 monthly payments of $325 each. The down payment is paid immediately, and the monthly payments are due at the end of each month. What nominal annual interest rate is Helen paying? What effective interest rate?
Wilma wants to buy a car that costs $52,000. She has arranged to borrow the total purchase price of the car from her bank at 6 percent interest rate. The loan requires monthly payments for a period of five years. If the first payment is due in one month after purchasing the car, what will be the amount of Wilma’s monthly payment on the loan?
While buying a new car, Austin made a down payment of $1,000.00 and agreed to make month-end payments of $270.00 for the next 3 years and 4 months. If she was charged an interest rate of 5.00% compounded quarterly for the entire term, answer the following, rounding to the nearest cent. 1. What was the cost of the car when Austin purchased it? Round to the nearest cent 2. What was the total amount of interest paid over the term? Round to the nearest cent
Helen is buying a $12,375 car with a $3,000 down payment, followed by 36 months of $325. The down payment is made immediately, and the monthly payments are due at the end of each month. What nominal annual interest rate is Helen paying? What effective interest rate?
While buying a new car, Thomas made a down payment of $1,000.00 and agreed to make month-end payments of $350.00 for the next 4 years and 7 months. If she was charged an interest rate of 3.00% compounded quarterly for the entire term, answer the following, rounding to the nearest cent. a. What was the cost of the car when Thomas purchased it? Round to the nearest cent b. What was the total amount of interest paid over the term?
While buying a new car, Alexander made a down payment of $1,100 and agreed to make month-end payments of $290 for the next 5 years and 7 months. She was charged an interest rate of 4% compounded semi-annually for the entire term.a. What was the purchase price of the car?Round to the nearest centb. What was the total amount of interest paid over the term?
Leila wants to buy a Corvette for $84,300 and the dealership has quoted an APR of 7.1%, compounded monthly, for 36 months. How much in total will Leila pay over the life of the loan assuming she make all payments on time?.
Kerri James is considering the purchase of a car, which will cost her $24,600. She will borrow the entire purchase price and make monthly payments over the next six years. The first payment is due next month and the annual interest rate is 3.00%. She will owe $____ on the car immediately following the 18th payment. A. 18,858.19 B. 18,531.57 C. 20,757.33 D. 19,184.00 E. 23,258.56
Patricia was receiving rental payments of $2, 000 at the beginning of every month from the tenants of her commercial property. What would be the value of her property in the market if she wants to sell it, assuming a market capitalization rate of 6.50% compounded annually?
Darwin is a young entrepreneur trying to keep his business afloat. He has missed two payments to acreditor. The first was for $3,485 seven months ago, and the second was for $5,320 last month.Darwin has had discussions with his creditor, who is willing to accept $4,000 one month from now and asecond payment in full six months from now.If the agreed upon interest rate is 7.35% compounded monthly, what is the amount of the secondpayment?
Anna is buying $16,000 worth of rare coins as an investment. The dealer is charging her an annual interest rate of %7.2 and is using the add-on method to compute her monthly payments. a. If Anna pays off the coins in 48 months, what are her monthly payments? b. If she makes a down payment of $3,000, how much will this reduce her monthly payments? c. If she wants to have monthly payments of $325, how large should her down payment be?