James bought a new hot tub today from Situation Hot Tubs. What is the present value of the cash flows associated with this transaction if the discount rate is 5.70 percent, he will receive a rebate of $597.00 from Situation Hot Tubs in 3 years, and he will pay $3,924.00 to Situation Hot Tubs in 7 years? Note: the correct answer is less than zero. O $-2156.44(plus or minus 10$) O $-2064.98(plus or minus 105) O $-3167.51(plus or minus 10$) O $-2256.98(plus or minus 10$) O None of the above has plus or minus $10 to correct answer

James bought a new hot tub today from Situation Hot Tubs. What is the present value of the cash flows associated with this transaction if the discount rate is 5.70 percent, he will receive a rebate of $597.00 from Situation Hot Tubs in 3 years, and he will pay $3,924.00 to Situation Hot Tubs in 7 years? Note: the correct answer is less than zero. O $-2156.44(plus or minus 10$) O $-2064.98(plus or minus 105) O $-3167.51(plus or minus 10$) O $-2256.98(plus or minus 10$) O None of the above has plus or minus $10 to correct answer

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

See similar textbooks

Related questions

Q: Javier is currently paying $1 comma 5001,500 in interest on his credit cards annually. If, instead…

A: The objective of this question is to calculate the future value of an annuity. An annuity is a…

Q: Solve it correctly please.

A: A savings certificate is a long-term savings account with a fixed interest rate and a defined…

Q: Tom borrowed $80,000 at a rate of 6.5% from bank for his new house. This is a 30 year monthly paid…

A: Given, Tom borrowed = $80,000 Rate= 6.5% Time period= 30 year

Q: Tony is purchasing a new car for 23,000. The tax is 7% of the purchase price and the dealership fee…

A: A loan refers to a contract between two parties where money is forwarded in exchange for a promise…

Q: Paul Havlik promised his grandson Jamie that he would give him $6,200 6 years from today for…

Q: Kurt loans Randy $14000. Randy repays the loan by paying Kurt $4000 at the end of one year and $6000…

A: The Effective Interest Rate is the actual interest rate earned or paid on a financial instrument…

Q: Howard bought a new hot tub today from Situation Hot Tubs. What is the present value of the cash…

A: Present value is calculated by following formula:- P = F ÷ (1+r)n Where, P = Present value F =…

Q: Jim made a down payment of 2500 dollars toward the purchase of a car. To pay the balance of the…

A: Given information: Down payment is $2,500 Nominal interest rate is 4% compounded monthly Payment of…

Q: Belinda purchased a 120-day $200,000 bank bill (at a simple interest rate) on 14 March 2022. The…

A: The term "annualized yield on investment" describes the rate of return received on an investment…

Q: 3) Isaac invested $77.000 in an account paying an interest rate of 4.6% compounded quarterly.…

A: Q3.The initial investment (PV) is $77,000.The interest rate (r) is 4.6% compounding quarterly.The…

Q: Tony Ring wants to attend Northeast College. He will need $75,000 4 years from today. Assume Tony's…

A: Present value refers to the money present today is more valuable than the money will receive in…

Q: Tristan Sandino is selling his motorcycle. He has been offered $500 cash plus monthly payments of…

A: The problem requires the calculation of net present value so that the actual amount given for the…

Q: 8. Your brother-in-law borrowed $2,000 from you 4 years ago and then disappeared. Yesterday he…

A: Future Value Future Value is the value which is measured at a specified date at a given interest…

Q: Christopher just borrowed $19,500.00 to buy a used minivan. The terms of the loan require him to…

A: Amount borrowed, pv $ 19,500.00Equal monthly payments, pmt $ 340.10Period (years), nper6Extra…

Q: Ted will receive a cash settlement of $195,000 in 9 months. A finance company has indicated that…

A: To determine how much Ted would receive now, we need to use the formula for simple…

Q: An individual purchased a 5-year, $10,000 promissory note with an interest rate of 4.5%/year…

A: The purchased value (PV) is $10,000.The Interest rate is 4.5%/year compounded semi annually.The…

Q: Larry purchased a gnu combined that cost 210,500, minus a rebate of 5500, a trade-in of 6500, and a…

A: Combined cost = 210,500 rebate = 5500 trade-in = 6500 Down payment = 9000 APR = 8%

Q: Mr. Yiu just wins a lottery of $6,261,362 today. He opens a bank account and puts the whole amount…

A: FV is the future worth of cash flows that have occurred in the past or present.

Q: Val bought a car for $48,000, putting down $15,000 cash and financing the remainder. How much are…

A: We need to use loan amortization formula below to calculate annual payment. where P=Loann=number of…

Q: Jason bought a home in Arlington, Texas, for $127,000. He put down 25% and obtained a mortgage for…

A: Price of home = $ 127000 Down payment = 25% Loan amount (PV) = 127000*(1-0.25)…

Q: Howden is interested in purchasing a jet ski for $15 834. He chose to finance this purchase across a…

A: Interest payment refers to the amount that is being paid with the principal amount in exchange for…

Q: Donald bought a new hot tub today from from Situation Hot Tubs in 3 years, and O $-3151.22(plus or…

A: Capital budgeting refers to the concept to estimate whether the project is acceptable or not by the…

Q: Vanessa was supposed to make a payment of $3,500 in 2 years and another payment for $1,800 in 5…

A: Equivalent value today is the present value of both payments based on time and interest rate of…

Question

James bought a new hot tub today from Situation Hot Tubs. What is the present value of the cash flows associated with this
transaction if the discount rate is 5.70 percent, he will receive a rebate of $597.00 from Situation Hot Tubs in 3 years, and he
will pay $3,924.00 to Situation Hot Tubs in 7 years? Note: the correct answer is less than zero.
O $-2156.44(plus or minus 10$)
O $-2064.98(plus or minus 105)
O $-3167.51(plus or minus 10$)
O $-2256.98(plus or minus 10$)
O None of the above has plus or minus $10 to correct answer

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: formula.

VIEW

Step 2: computation of present value of rebate.

VIEW

Step 3: Computation of present value of payment amount.

VIEW

Step 4: Computation of present value of cash flows.

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Money Management and Achieving Financial Goals

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Mark just took out a loan from the bank for $3,700.00. He plans to repay this loan by making a special payment to the bank of $800.00 in 4 years and by also making equal, regular annual payments of X for 5 years. If the interest rate on the loan is 9.73 percent per year and he makes his first regular annual payment in 1 year, then what is X, Mark's regular annual payment? O $969.33 (plus or minus $1) O $824.76 (plus or minus $1) O $1,178.91 (plus or minus $1) $1,113.89 (plus or minus $1) O none of the answers are within $1 of the correct answer
Javier is currently paying $1 comma 5001,500 in interest on his credit cards annually. If, instead of paying interest, he saved this amount every year, how much would he accumulate in a tax-deferred account earning 1111 percent over 99, 1414, or 1919 years? Note: Round intermediate computations to at least five (5) decimal places. Click on the table icon to view the FVIFA table: LOADING...
Tristan Sandino is selling his motorcycle. His friend, Rudy, is offering to pay cash in the amount of $8,800. Another friend, Costa, has offered payments of $300 monthly for 4 years. What is the present value of Costa's payments? Assume money is worth 3.5%, compounded monthly.
Jose borrows P5000 from a lending company for 5 years at 15%. At the end of the 5ft year, he renews the loan for the amount due and another P10,000 more for 3 years at 12%. What is the lump sum due? (You are expected to draw the Cash Flow Diagram in the solution). Follow this solution format: Given: Required: Solution:
Zappy Inc. designs a new financial instrument that called the SafetyNet. This instrument gives the holder access to the following cashflows: For the first 4 years, the holder receives $95 per year starting one year from today (a total of 4 payments). The holder does not receive any cashflows for year 5. Starting at the end of year 6, the holder receives $60 growing at a rate of 4% per year forever. The holder has to pay a “service fee” of $7 every year starting at the end of year 2; this goes on forever. The prevailing discount rate throughout is 6%. The financial engineer would like to determine a fair market price for this financial instrument. What do you suggest this price to be? Please show your work.
An accounting firm agrees to purchase a computer for $180,000 (cash on delivery) and the delivery date is in 270 days. How much do the owners need to deposit in an account paying 0.85% compounded quarterly so that they will have $180,000 in 270 days? (a) State the type. sinking fund amortization present value future value ordinary annuity (b) Answer the question. (Round your answer to the nearest cent.) $
13) Jane needs $30,000 to buy another new car in eight years. How much should she deposit at the end of each half year into an account that earns 4% interest compounded semiannually? A) $1263.36 B) $1663.37 C) $1609.50 D) $160.95 E) none of these
10) Vanessa wants to withdraw $8,000 each year from July 1, 2025 through July 1, 2029. The investment fund earns interest at a rate of 5%. In order to make these withdrawals, Vanessa will invest an annuity on July 1, 2021 through July 1, 2024. Calculate the annuity Vanessa needs to invest each year. Yellow Company purchases a truck on January 1, 2021. According to the contract Yellow will not make any payments in 2021, 2022 and 2023. Yellow is to make an annuity payment of $5,000 starting December 31, 2024 through December 31, 2028. Calculate the cost of the truck. 11) Stella has $3,000,000 in her investment fund. She wishes to withdraw $338,868 12) at the end of each of the next 13 years. What interest rate must she earn in order to accomplish her goal. A note receivable that is due in 15 months from now is always classified as a 13) long-term asset. (True/False) 14) A long-term note receivable should be disclosed in Other Assets in a classified balance sheet. (True/False)
Troy will receive $9486 at the end of Year 2. At the end of the following two years, he will receive $7971 and $2238, respectively. What is the future value of these cash flows at the end of Year 6 if the interest rate is 4 percent?
Russell bought a new hot tub today from Situation Hot Tubs. What is the present value of the cash flows associated with this transaction if the discount rate is 5.70 percent, he will receive a rebate of $527.00 from Situation Hot Tubs in 1 year, and he will pay $3,973.00 to Situation Hot Tubs in 4 years? Note: the correct answer is less than zero. $-2684.29(plus or minus 10$) $-3681.45(plus or minus 10$) $-2760.68(plus or minus 10$) $-2655.87(plus or minus 10$) None of the above has plus or minus $10 to correct answer
Need answers ASAP... Datu Iro borrows P4000 from his parents for his final year of college. He agrees to repay It at 7% Interest in one payment 3 years later. How much does he repay? How much of this is Interest and how much is principal? Drawthe cash flow diagram.
Paul Havlik promised his grandson Jamie that he would give him $7,300 5 years from today for graduating from high school. Assume money is worth 10% interest compounded semiannually. What is the present value of this $7,300? (Use the Table provided.) (Do not round intermediate calculations. Round your answer to the nearest cent.) Present value

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS