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Corporate Fin Focused Approach
Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 28P
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I need help with all of it please :)))
Bruce goes into a car dealership to purchase a new vehicle. The one he wants to buy costs $16 000, however he doesn't have that much money in his bank. The salesman offers him a financing option of a 30% deposit followed by 12 monthly payments of $1150. (a) Find the amount of the deposit. (b) Calculate the total cost of the loan under this financing option. Bruce's father generously offers him an interest free loan of $16000 to buy the car to avoid the expensive loan repayments. They agree that Bruce will repay the loan by paying his father $x in the first month and $y every following month until the $16 000 is repaid. The total amount Bruce's father receives after 12 months is $5200. This can be expressed by the equation r+1ly : is $10 600. 5200. The total amount that Bruce's father receives after 24 months (c) Write down a second equation involving x and y. (d) Determine the value of x and the value of y. (e) Calculate the number of months it will take Bruce's father to receive the $16000.
Transcribed Image Text:Bruce goes into a car dealership to purchase a new vehicle. The one he wants to buy costs $16 000, however he doesn't have that much money in his bank. The salesman offers him a financing option of a 30% deposit followed by 12 monthly payments of $1150. (a) Find the amount of the deposit. (b) Calculate the total cost of the loan under this financing option. Bruce's father generously offers him an interest free loan of $16000 to buy the car to avoid the expensive loan repayments. They agree that Bruce will repay the loan by paying his father $x in the first month and $y every following month until the $16 000 is repaid. The total amount Bruce's father receives after 12 months is $5200. This can be expressed by the equation r+1ly : is $10 600. 5200. The total amount that Bruce's father receives after 24 months (c) Write down a second equation involving x and y. (d) Determine the value of x and the value of y. (e) Calculate the number of months it will take Bruce's father to receive the $16000.
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