Calculate the amount of the payments required of M&B under each alternative. Quarterly fixed principal + interest payments option with manufacturer: Total amount of payments Fixed blended monthly instalment note with the bank including principal and interest: (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 2 decimal places, e.g. 5,275.25. Round interest rate per month to 5 decimal places, e.g. 1.25976%) Total amount of payments
Calculate the amount of the payments required of M&B under each alternative. Quarterly fixed principal + interest payments option with manufacturer: Total amount of payments Fixed blended monthly instalment note with the bank including principal and interest: (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 2 decimal places, e.g. 5,275.25. Round interest rate per month to 5 decimal places, e.g. 1.25976%) Total amount of payments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Calculate the amount of the payments required of M&B under each alternative.
Quarterly fixed principal + interest payments option with manufacturer:
Total amount of payments $
Fixed blended monthly instalment note with the bank including principal and interest: (For calculation purposes, use 5 decimal places
as displayed in the factor table provided. Round answer to 2 decimal places, eg. 5,275.25. Round interest rate per month to 5 decimal
places, e.g. 1.25976%)
Total amount of payments
Transcribed Image Text:M&B Tooling Ltd. is assessing two available options for the purchase of new equipment with a negotiated cash price of $100,000. The
manufacturer is willing to accept a down payment of 20% of the purchase price and an instalment note for the balance. The note
would require quarterly fixed principal payments (plus interest) starting October 1, 2023, for a period of two years. M&B has a
proposal from its bank for an instalment loan for two years that requires a fixed blended monthly payment (including both principal
and interest) starting August 1, 2023. The loan would be for 80% of the equipment's purchase price. The current market rate of
interest is 8%. Both contracts have an interest rate of 8%
Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.
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