Answered: Rate and factor rates should be rounded…

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter27: Time Value Of Money (compound)

Section: Chapter Questions

Problem 1E

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If you are the financial consultant of the Pereda family, which financing option will you suggest that Mr. Pereda choose and why?

Transcribed Image Text:Rate and factor rates should be rounded off to 6 decimal places for the computation of monthly amortization. The monthly amortization should be rounded off to 2 decimal places (centavos). For the add-on interest computation, interest and monthly interest should be rounded off to nearest 2 decimal places (centavos). Mr. Aldrin and Mrs. Aileen Pereda are engaged in several businesses. Mr. Aldrin Pereda is a freelance property consultants for various real estate developer. He also co own and manage with his only son, Aldrin Patrick, a business firm engage in providing services for air-conditioning installation, repair and maintenance. Father and son is thinking of buying a brand-new Mitsubishi L300 FB utility vehicle to replace their old one. The list price of a brand-new Mitsubishi L300 FB van is P813,000.00. The product specialist from Mitsubishi outlet they talked to suggested 2 financing schemes from their financial institution partners. The 2 schemes are as follows: Bank of Philippine Islands Orix Metro Leasing Regular Utility Vehicle Loan Regular Auto Loan Down payment of 15% on the amount of the Down payment of 30% on the amount of the vehicle vehicle Loan Term is 5 years Payable in equal monthly amortization Loan Rate is 10.93% per annum Simple interest Loan Term is 5 years Payable in monthly installments Loan Rate is 10.93% per annum. Add-on interest Mr. Aldrin Pereda and family however, only has a total of P130,000.00 in the bank. If you are the financial consultant of the Pereda family, which financing option will you suggest that Mr. Pereda choose and why?

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