3. To buy a computer, Tom borrowed P30,000 at 9% simple interest calculated yearly. If he will be making monthly payments for four years, calculate: a. The amount of interest paid over the 4 years, b. The total amount to be paid back, c. The monthly payment amount.

Q: List two advantages of using NPV.

A: Net present value is the difference between the present value of cash inflows and the present values…

Q: Consider a position of two purchased calls (AT&T, three months, K30) and one written put (AT&T,…

A: Delta is a commonly used Greek letter in options trading to represent the sensitivity of an option's…

Q: Explain compound interest.

A: Compound interest.

Q: What are the cell #s in the NPV formula?

A: The difference between the present value of cash inflows and the present value of cash outflows over…

Q: Give an example of each.

A: Cost standard example: The estimation to regulate the entire direct material cost standard and…

Q: Illustrates how you may obtain the true IRR by using the Goal Seek function?

A: IRR refers to the rate of return at which the net present value of a project is zero. This is the…

Q: Explain about the Black–Scholes model.

A: Black Scholes option pricing model is probably the most commonly used option pricing model in…

Q: What is Monte Carlo simulation analysis?

A: Answer: Monte Carlo simulation is the methodology used to consider the financial, cost, and project…

Q: What is a limit order?

A: Limit order It is such an order to buy or trade a security at or superior to a predefined cost. The…

Q: Modigliani and Miller's Method - discuss briefly

A: Modigliani-Miller Theorem: It represents one of the most significant theorems in the field of…

Q: Explain the put call parity model. What are the advatages and disavantages of it?

A: Put-call parity characterizes the connection between calls, puts and the underlying assest price or…

Q: Draw a figure to explain Elements of required return - establishing a MARR?

A: The figure is represented as below: Note: Values assumed

Q: Describe the fundamentals of Replacement-Analysis?

A: Replacement analysis is the process where it is determined whether it would be beneficial to replace…

Q: Describe the process of calculating NPV.

A: Net Present Value (NPV) is a capital budgeting technique which uses a discount rate to bring all the…

Q: What is the DCF method?

A: DCF is a complex tool for valuation which approximates the value of any investment depending upon…

Q: The most popular method used to calculate VaR is: Group of answer choices B. Parametric VaR D.…

A: VAR is the value at risk. It is used to calculate the maximum amount of loss from a portfolio for a…

Q: What are the assumptions of Walter’s model?

A: The Walter Model of Careers is an influential theory in the field of career development. This model…

Q: How did you compute what the "R" value was in the equation?

A: IRR is the internal rate of return and is the break even rate of return at present value of cash…

Q: Why is this formula very important F = P( I + i)?

A: Time value of money (TVM) The thought cash you at present have would, later on, be worth more than a…

Q: Explain Replacement-Analysis Fundamentals?

A: Replacement-analysis fundamentalUnder this, the decision regarding the replacement of obsolete as…

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.