Present value. A smooth-talking used-car salesman who smiles considerably is offering you a great deal on a "pre-owned" car. He says, "For only 6 annual payments of $2,500, this beautiful 1998 Honda Civic can be yours." If you can borrow money at 10%, what is the price of this car? Assume the payment is made at the end of each year. If you can borrow money at 10%, what is the price of this car?

Present value. A smooth-talking used-car salesman who smiles considerably is offering you a great deal on a "pre-owned" car. He says, "For only 6 annual payments of $2,500, this beautiful 1998 Honda Civic can be yours." If you can borrow money at 10%, what is the price of this car? Assume the payment is made at the end of each year. If you can borrow money at 10%, what is the price of this car?

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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Similar questions

Suppose a property you are seeking to purchase is valued at $200,000. You can take out a loan of 80 percent from the bank, which amortizes in 30 years. The current market interest rate is 7.35 percent. Suppose you can only afford a monthly payment of USD 900, but the seller is desperate to sell this property. The seller has already lowered the selling price to USD 180,000. What is the minimum amount of rebate that the seller should provide to you in order to make you purchase the property?
After years of working hard and finally becoming a millionaire, you would like to reward yourself by buying a sports car. Dealer A offers a model that you like for just RM1.8 million, if purchased and fully paid now. Dealer B offers the same model for RM2 million, but you can pay for the car after 2 years of ownership. Determine which offer is economically better, considering interest rate of 5% per year. Explain your answer.
Suppose that a car that you want costs $9000. You make a down payment of $1000 and finance the rest for 4 years at 1.9% interest, compounded monthly. If you make monthly payments for 4 years, what is the total amount of interest that you'll end up paying? Round your answer to two decimal places if rounding is necessary. The $ sign is already written next to the answer box, so do not type a $ sign in your answer.
Congratulations! You just bought a new car. You didn't have enough cash to pay for the whole thing right now, so you decided to finance the purchase and get a car loan. You will be making payments of $436.08 at the end of every month for 4 years. The rate of interest is 5 6% compounded annually. Determine the original purchase price of the car
You’re considering purchasing an apartment for $200,000. You believe that you can earn an initial rental income of $12,000 per year on it and that the rental income will grow at 3% per year. You also believe that you can sell the apartment for $225,000 after 5 years. The IRR calculation is shown below:
its already answered in this site just copy paste it and send me here
1. You borrow 7,000 dollars to help pay your college expenses. You agree to repay the loan at the end of 4 years at 8% interest compounded quarterly. What is the maturity value of the loan? 2. If inflation causes the cost of automobiles to increase by 2.5% each year. What should a car cost today if it cost 21,000 dollars 5 years ago? 3. Assume you are thinking of buying a house currently priced at 169,000 dollars. If housing prices rise at an annual inflation rate of 3% , estimate the purchase price of a similar house if you wait 4 years before committing yourself to buying one. 4. Suppose when you are 52 years old, the yearly statement you get from the Social Security Administration estimates that your monthly payment at age 66 will be 620 dollars. If inflation stays constant at 2% , what will be the purchasing power of that 620 dollars.
Quantitative Problem: You need $14,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 4 years, with the first payment to be made one year from today. He requires a 9% annual return. a. What will be your annual loan payments? Do not round intermediate calculations. Round your answer to the nearest cent. b. How much of your first payment will be applied to interest and to principal repayment? Do not round intermediate calculations. Round your answers to the nearest cent. Interest: $ Principal repayment: $
Suppose you can afford to pay $ 350 a month for 5 years towards a new car with no down payment. If the current interest rates are 4.5%, how expensive a car can you afford?
You need $15,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 4 years, with the first payment to be made one year from today. He requires a 8% annual return. What will be your annual loan payments? Round your answer to the nearest cent. Do not round intermediate calculations.

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