BUS45 DIS2

If Deborah leases the car, she will pay $549 per month for 3 years with $1,500 due at signing. But, at the end of 3 years, she will have to turn the car in and either lease another car or purchase a car. What would the total amount be that she will pay over the life of the lease?

Tom accepted a written offer from Jill to build a house for Jill. Tom agreed to a price of $800,000. Two months into the construction, Tom realizes that he will barely make a profit on the deal. Tom informs Jill that he will not continue building her house unless Jill agrees to pay Tom an additional $200,000. Jill and Tom agree in writing that Jill will pay Tom an additional $200,000 to complete construction of the house. After Tom completes the construction of the house, Jill refuses to pay Tom the additional $200,000. Tom sues Jill alleging breach of contract with regard to the additional $200,000. Based on the facts stated in this questiona. None of the answers are correctb. Tom will win as long as he is not a minorc. Tom will lose because there was no contract for this $200,000.d. Jill will lose because there was a contract for this $200,000

After Shipra got a job, the first thing she bought was a new car. She took out an amortized loan for $45,000—with no ($0) down payment. She agreed to pay off the loan by making annual payments for the next four years at the end of each year. Her bank is charging her an interest rate of 10% per year. Yesterday, she called to ask that you help her compute the annual payments necessary to repay her loan. Calculate the annual payment and complete the following loan amortization table: Year Beginning Amount Payment Interest Paid Principal Paid Ending Balance 1 $45,000.00                     2                          3                          4                     -$0.02

Myrta entered into a contract with "Big Builder on December 1, 2018 to remodel the interior of her Coffee Shop. The Contract required Big Builder to complete the project ata cost of $10,000 on or before January 1, 2019 (so she could open herCoffee Shop that day). Big Builder barely got started on the project by January 1, so Myrta terminated the Contract without paying Big Builder anything. Myrta then found a new Contractor, named "Better Builder who agreed to complete the same project by March 1, 2019 but at a cost of $11,500. Better Builder completed the project on March 1, 2019 and Myrta paid them $11,500. Happy the project is finally complete, Myrta still feels "ripped off by Big Builder and wants to sue them to recover her damages for breach of contract. Not only did Myrta have to pay $11,500 to Better Builder, but (i) she also had to pay a cleaning service $200 to clean up the construction mess Big Builder had left behind and (ii) she also lost an estimated $500 in profits she…

In five years, Kent Duncan will retire. He is exploring the possibility of opening a self-service car wash. The car wash could be managed in the free time he has available from his regular occupation, and it could be closed easily when he retires. After careful study, Mr. Duncan has determined the following: • A building in which a car wash could be installed is available under a five-year lease at a cost of $3,300 per month. • Purchase and installation costs of equipment would total $126,000. In five years the equipment could be sold for about 10% of its original cost. • An investment of an additional $9,500 would be required to cover working capital needs for cleaning supplies, change funds, and so forth. After five years, this working capital would be released for investment elsewhere. • Both a wash and a vacuum service would be offered with a wash costing $1.53 and the vacuum costing $0.85 per use. • The only variable costs associated with the operation would be 7.5 cents per wash…

You are starting a business and have signed a rental lease for an office in Santa Monica. This office lease is for four years with an annual rent of $24,000 per year, paid at the beginning of each year of the lease. However, just before you pay your first rent, the property owner decides he wants to use the space for another purpose and proposes to buy back the lease from you. The rent for any other similar space you can find for your business is $30,000 per year, also paid at the beginning of the year. What would be the minimum compensation that you would ask from the property owner to give up your original lease? Calculate the numerical answer. Assume the discount interest rate is 6%.

Tracy wants to buy a new car. She is provided with two options by the dealership: $6,000 cash back or 0% financing for 60 months on the $50,000 car that she wants to buy, Tracy determines that the cash back is the best option, as her alternative choice is to borrow from the bank at 0.99% APR, compounded monthly, for 60 months. Prior to finalizing her choice, the bank calls Tracy back and tells her that because of Federal Reserve rate hikes, the new interest rate at the bank is 5.99% APR. With this new interest rate, should Tracy reconsider her choice of the cash back option? O No, the value of the 0% financing decreases with the higher rate at the bank O Yes, the cash back option now has higher present value O Yes, the value of the 0% financing increases with the higher rate at the bank O No, the cash back option now has lower present value

You have been transferred to New Mexico for your post-graduate internship. You and your spouse have 2 children. You decide you need a home. The current owner of the home will sell it to you for $120,000, or you can rent it for $900 per month on a 1-year lease. You believe you could resell the home after 1 year for $130,000. Should you purchase the home or rent it?

Allison bought a Blu-ray DVD player from the store for $250 that came with a one-year warranty. At checkout, she was asked if she would like to buy a two-year extended warranty that would replace her DVD player with an identical one if it broke down. The extended warranty costs $70, and Allison expects that the DVD player will depreciate in value by $50 every year as new models come out (this means a replacement would cost $150 after 2 years and $100 after 3 years). Suppose Allison pays for the purchase of the extended warranty with her credit card, which has a 15 percent interest rate. Also assume that Allison knows there is a 10 percent chance that the DVD player will break in any given year. The present value of buying the extended warranty is $ (Round your response to two decimal places and use a minus sign if necessary.)

a) Gerry likes driving small cars and buys nearly identical ones when- ever the old one needs replacing. Typically, he trades in his old car for a new one costing about $15 000. A new car warranty covers all repair costs above standard maintenance (standard maintenance costs are constant over the life of the car) for the first two years. After that, his records show an average repair expense (over standard maintenance) of $2500 in the third vear (at the end of the year), increasing by 50 percent per year thereafter. If a 30 percent declining- balance depreciation rate is used to estimate salvage values and interest is 8 percent, how often should Gerry get a new car? b) Gerry (see Problem a ) has observed that the cars he buys are some- what more reliable now than in the past. A better estimate of the repair costs is $1500 in the third year, increasing by 50 percent per year thereafter, with all other information in Problem a) being the same. Now how often should Gerry get a new car?

Jia Ma purchased a condominium 5 years ago for $160,000, paying $1,174.75 per month on her $146,000, 9 percent, 30-year mortgage. The current loan balance is $139,985. Recently, interest rates dropped sharply, causing Jia to consider refinancing her condo at the prevailing rate of 7 percent. She expects to remain in the condo for at least 5 more years and has found a lender that will make a 7 percent, 25-year, $139,985 loan, requiring monthly payments of $989.38. Although there is no prepayment penalty on her current mortgage, Jia will have to pay $1,000 in closing costs on the new mortgage. She is in the 15 percent tax bracket. Based on this information, use the mortgage refinancing analysis form in Worksheet 5.4 to determine whether she should refinance her mortgage under the specified terms. Assume that Jia is assumed to take the standard deduction. She refinance her mortgage under the specified terms.

A man had to have the muffler replaced on his 2-year-old car. The repairman offered two alternatives. For $250 he would install a muffler guaranteed for 2 years. But for $400 he would install a muffler guaranteed “for as long as you own the car.” Assuming the present owner expects to keep the car for about 3 more years, which muffler would you advise him to have installed if you thought 10% was a suitable interest rate and the less expensive muffler would only last 2 years?

Peter got a 8-year assignment in Argentina. Consequently, he will rent out his three- bedroom house in Hancock to an old friend, and given their friendship, Peter only requires end of the year payments (thus no monthly pmts) to be deposited in a savings account created solely for this purpose. Rental income will be 13,709 dollars per year but maintenance/repair costs will be 503 dollars in the first year and thereafter increase by 213 dollars per year. The tenant will be doing the maintenance/repair operations and therefore, at the end of each year, deposits the annual rent amount net of maintenance costs. Compute how much money will Peter have in his savings account upon his return (8 years from now) given that the proxy interest rate is 7% per year, compounded annually. (note: round your answer to the nearest cent, and do not include spaces, currency signs, plus or minus signs, or commas) 128,614.7 margin of error +/- 100

Would Qualifying an Indorsement Be Ethical? Suppose you have taken a promissory note for $3,500 payable in 12 months with interest at 10 percent as payment for some carpentry work you did for a friend. You have some reason to believe the maker of the note is in financial difficulty and may not be able to pay the note when it is due. You discuss with an elderly neighbor the possibility of her buying the note from you as an investment, and she agrees to buy it from you for $3,000. Would it be ethical for you to indorse the note with a qualified indorsement ("without recourse")?

Farrah and Sam Newton, a dual-income couple in their late 20s, want to replace their 7-year-old car, which has 90,000 miles on itand needs some expensive repairs. After reviewing their budget, the Newtons conclude that they can afford auto payments of notmore than $330 per month and a down payment of $2,400. They enthusiastically decide to visit a local dealer after reading itsnewspaper ad offering a closed-end lease on a new car for a monthly payment of $330. After visiting with the dealer, test-drivingthe car, and discussing the lease terms with the salesperson, they remain excited about leasing the car but decide to wait untilthe following day to finalize the deal. Later that day the Newtons begin to question their approach to the new car acquisitionprocess and decide to carefully reevaluate their decision.1. What are some basic purchasing guidelines that the Newtons should consider when choosing which new car to buy orlease? How can they find the information they need?2. How would…

Amanda Forsythe of Springfield, Missouri, must decide whether to buy or lease a car she has selected. She has negotiated a purchase price (gross capitalized cost) of $30,000 and could borrow the money to buy from her credit union by putting $2,500 down and paying $645.84 per month for 48 months at 6 percent APR. Alternatively, she could lease the car for 48 months at $370 per month by paying a $2,500 capitalized cost reduction and a $350 disposition fee on the car, which is projected to have a residual value of $12,200 at the end of the lease. Round your answers to the nearest cent. Finance charges (borrowing the car): $ The dollar cost of leasing: $

Marisa leases a car that has a purchase price of $63,500 with an MSRP of $66,950 and decides to lease the car for 36 months. Find the monthly lease payment (in dollars) if the annual interest rate is 7.5%, the trade-in of her car was $35,000, she makes a $3,000 down payment, the residual value is 35% of the MSRP. Include a sales tax of 6.25%. (Round your answer to the nearest cent.)

Ben Halls is trying to decide whether to lease or purchase a new car costing $18,000. If he leases, he’ll have to pay a $600 security deposit and monthly payments of $450 over the 36-month term of the closed-end lease. Ben could earn 1% on the amount of any down payment or security deposit. On the other hand, if he buys the car then he’ll have to make a $2,400 down payment and will finance the balance with a 36-month loan with a 4% interest rate; he’ll also have to pay a 6 percent sales tax ($1,080) on the purchase price, and he expects the car to have a residual value of $6,500 at the end of 3 years. Ben can earn 4 percent interest on his savings

A car dealer leases a small computer with software for $5000 per year. As an alternative he could buy the computer for $7500 and lease the software for $3500 per year. Any time he would decide to switch to some other computer system he could cancel the software lease and sell the computer for $500. (a) If he buys the computer and leases the software, what is the payback period? (b) If he kept the computer and software for 8 years, what would be the benefit–cost ratio, based on a 5% interest rate?

Melanie, an office administrator, is evaluating the following quotation that she received for the purchase of a printer for her office: Lease Option: Make payments of $85 at the beginning of every month for 6 years. At the end of 6 years, make the final payment of $1,500. Purchase Option: Make a payment of $5,950 immediately.

Morteza took out a loan from a bank at a 12% APR to buy a house. The loan required him to make monthly payments over a 3-year period. After paying for 24 months (2 years), Morteza sold the house to Negin. Negin then restructured the remaining loan balance into a new monthly repayment plan spread over 2 years. However, 1 year after purchasing the house, Negin decided to pay off the entire remaining loan amount, which was $100,000, thereby gaining full ownership of the house. Determine the original price of the house.

In order to buy a new car, you finance $20,000 with no down payment for a term of five years at an APR of 6%. After you have the car for one year, you are in an accident. No one is injured, but the car is totaled. The insurance company says that before the accident, the value of the car had decreased by 25% over the time you owned it, and the company pays you that depreciated amount after subtracting your $500 deductible.Suggestion: Use the following formula for the equity built up after k monthly payments. Equity =  Amount borrowed × ((1 + r)k − 1) ((1 + r)t − 1) Can you pay off the loan using the insurance payment, or do you still need to make payments on a car you no longer have? Yes, you can pay off the loan using the insurance payment.No, you cannot pay off the loan using the insurance payment.     If you still need to make payments, how much do you still owe? (Subtract the payment from the insurance company. Round your answer to the nearest cent. If you no longer…

The Bainter family is moving to a new town and needs a place to live. The Bainters have narrowed their search to two houses they think will work for their family. The first house is a rental. The monthly rent is listed at $1,190, with the expectation that it will increase 1.7% each year. The second house is available for purchase. The sale price is listed at $195,000, and the Bainters have been approved for a loan that would allow them to purchase the home and pay for it over 30 years. Cost of Renting To estimate the cost of renting, the Bainters read through the rental agreement to determine for what types of costs they would need to budget. These costs include fees, renters' insurance, and utilities. The Bainters also research average prices for anything the landlord would not provide, such as renters' insurance. The Bainters realize they will have approximately the same costs for electricity and natural gas whether they rent or purchase, so they decide to exclude…