Ramona Garcia will be remodeling her kitchen before she places her home on the market to sell. She researched what three local companies would charge her for the remodeling and their best financing option for each company. Her research revealed the following results. Company Total Remodeling Cost Financing Terms Ramona is Considering Large Home Improvement Store $13,200 Financing through the bank servicing the national home improvement company: 1 year 0% financing with a minimum monthly payment of $100; 16.99% APR for the remaining 3 years Local Small Business Home Improvement Company $11,800 Financing through her local credit union: 3% origination fee to be paid first then 7.5% APR for 5 years Online Construction Business $10,200 Financing through an online banking service: $1,000 applied toward the project before payback begins then 11.9% APR for 4 years. Calculate the monthly payments for 2 of these options given that interest is compounded monthly. What is the total amount that must be paid for each of the 2 options you chose? In the 2 options you chose, what percentage of the total amounts to be paid back to each financial institution is interest? How would you explain to Ramona the differences between these percentages and their corresponding APR's? Based on the financial outcomes for the 2 options you chose, which company would you suggest that Ramona choose to remodel her kitchen? Defend your suggestion. No hand written sol
Ramona Garcia will be remodeling her kitchen before she places her home on the market to sell. She researched what three local companies would charge her for the remodeling and their best financing option for each company. Her research revealed the following results. Company Total Remodeling Cost Financing Terms Ramona is Considering Large Home Improvement Store $13,200 Financing through the bank servicing the national home improvement company: 1 year 0% financing with a minimum monthly payment of $100; 16.99% APR for the remaining 3 years Local Small Business Home Improvement Company $11,800 Financing through her local credit union: 3% origination fee to be paid first then 7.5% APR for 5 years Online Construction Business $10,200 Financing through an online banking service: $1,000 applied toward the project before payback begins then 11.9% APR for 4 years. Calculate the monthly payments for 2 of these options given that interest is compounded monthly. What is the total amount that must be paid for each of the 2 options you chose? In the 2 options you chose, what percentage of the total amounts to be paid back to each financial institution is interest? How would you explain to Ramona the differences between these percentages and their corresponding APR's? Based on the financial outcomes for the 2 options you chose, which company would you suggest that Ramona choose to remodel her kitchen? Defend your suggestion. No hand written sol
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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Ramona Garcia will be remodeling her kitchen before she places her home on the market to sell. She researched what three local companies would charge her for the remodeling and their best financing option for each company. Her research revealed the following results.
|
Company |
Total Remodeling Cost |
Financing Terms Ramona is Considering |
|---|---|---|
|
Large Home Improvement Store |
$13,200 | Financing through the bank servicing the national home improvement company: 1 year 0% financing with a minimum monthly payment of $100; 16.99% APR for the remaining 3 years |
|
Local Small Business Home Improvement Company |
$11,800 | Financing through her local credit union: 3% origination fee to be paid first then 7.5% APR for 5 years |
|
Online Construction Business |
$10,200 | Financing through an online banking service: $1,000 applied toward the project before payback begins then 11.9% APR for 4 years. |
- Calculate the monthly payments for 2 of these options given that interest is compounded monthly.
- What is the total amount that must be paid for each of the 2 options you chose?
- In the 2 options you chose, what percentage of the total amounts to be paid back to each financial institution is interest?
- How would you explain to Ramona the differences between these percentages and their corresponding APR's?
- Based on the financial outcomes for the 2 options you chose, which company would you suggest that Ramona choose to remodel her kitchen? Defend your suggestion. No hand written solution
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