A manufacturing firm purchased a heavy duty drilling machine. They were given two payment options: Option 1: Make a payment of $41,500 immediately to settle the invoice for the machine. Option 2: Make a payment of $22,500 immediately and the balance of $23,550 in 3 months to settle the invoice. If money is worth 4.12% compounded quarterly, answer the following: a. What is the total present value of Option 2? Round to the nearest cent b. Which option is economically better for the manufacturing firm? O Option 1 O Option 2

Q: 12. A property has an NOI of $800,000. If you have a loan with annual debt service of $600,000, what…

A: DCR (Debt coverage ratio) It helps to determine the available net operating income to cover per unit…

Q: followed by one payment of $45,000 at the end of two years, which option would you recommend? The…

A: Present value is calculated by discounting the present cash flow of the projects by interest rate…

Q: A company has the following payment options to settle a loan: ■ Option A: To pay $19,000 today, or ■…

A: The question requires us to suggest a better payment option to settle the loan among the 2 given…

Q: When Pacific Inc. bid for a project with the government, the company was offered the following two…

A: As per the concept of time value of money the worth of money changes with passage of time. Money has…

Q: 1. An investment will pay $100 at the end of each of the next 3 years, $250 at the end of Year 4,…

A: Question 1PV = $1,293.22FV = $1,636.80Question 22a. r ≈ 0.1487 or 14.87%2b. The correct option is:…

Q: Show complete solution: Consider the following options in purchasing a car:   Option 1 = purchase…

A: Calculation of which option are more economical are as follows

Q: The winner of a $10,000,000 prize has the following payment choices. If the interest rate is 10%,…

A: Annuity refers to series of annual payment which is paid or received at start or ending of specific…

Q: 1. You have a choice of leasing a truck for six years at $9,000/year, paid at the end of each year,…

A: We need to compute present value of lease option and than shall compare the same with the cost of…

Q: Assume you win a lottery, and you are offered the following stream of payments by the lottery…

A: Future value of cash flows will be reflective of the value of cash flows in the future after…

Q: An private firm can buy a machine for $ 40,000. A down payment of $ 4,000 is required and the…

A: The annual equivalency method is used to compare the two similar projects with the unequal term.…

Q: If you could solve option 4 with formulas Option 4: take $150,000 monthly from the shop revenue for…

A: Repayment of the financed amount or loan is made in fixed instalments which includes part of the…

Q: Determine the monthly payment for each of the three options if the terms of each loan are the same.…

A: First, we need to determine the loan amount by using the formula below: Loan Amount = Car value -…

Q: Question number 7. Complete the amortization schedule.

A: Monthly payment is calculated below:

Q: A house is purchased for $300,000. Determine the monthly payment for each of the following options…

A: Equated monthly instalment(EMI) is calculated by the present value of annuity due formula. EMI is…

Q: Your landscaping company can lease a truck for $8,150.00 a year for 4 years. It can instead buy the…

A: The Present Value of Ordinary Annuity refers to the concept which gives out the discounted or…

Q: Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor…

A: Investment Appraisal: It is  a process a business attempts to assess likely significant activities…

Q: A manufacturer needs to borrow money to purchase a building. The purchase price of the building is…

A: given, purchase price = $1.5 million = 1500,000 downpayment = $300,000 rate =4.85% n =20 years

Q: Catalina Enterprises is considering a project that would require an initial outlay of $450,000 and…

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

Q: nuously compounded APRs). Suppose that someone came to you with an opportunity: they need $1,000 in…

A: 4 months interest rate=2.93%2 months interest rate=2.75%Money=$1000Interest amount=$6.62

Q: 1. You have two options to purchase a car. Your first option is to purchase the car at $26.200 and…

A: The objective of this question is to compare two options for purchasing a car: financing the car…

Q: A project contractor needs P500,000 for his operation. One financial institution is willing to lend…

A: With the given information, we need to first compare the interest rates and the payment frequency in…

Q: Your company is considering purchasing an expensive plece of equipment. The manufacturer of the…

A: Present Value:  The present value is the value of cash flow stream or the fixed lump sum amount at…

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.