The Atlas Machinery Corporation sells its equipment to contractors on either of the following arrangements: a) cash basis: payments of marked price less 10%; b) installment basis: down payment of 20% of the marked price and the balance payable in equal annual installments for the next 4 years. If you are the engineer buying a 7S Concrete Mixer which is marked at P250,000 and if money is worth 5% compounded annually, which of the following arrangements will you consider better from your standpoint? A) Pay P225,000 cash, or b) pay a down payment of P50,000 and pay the balance on equal installments of P50,000 annually for the next 4 years?

The Atlas Machinery Corporation sells its equipment to contractors on either of the following arrangements: a) cash basis: payments of marked price less 10%; b) installment basis: down payment of 20% of the marked price and the balance payable in equal annual installments for the next 4 years. If you are the engineer buying a 7S Concrete Mixer which is marked at P250,000 and if money is worth 5% compounded annually, which of the following arrangements will you consider better from your standpoint? A) Pay P225,000 cash, or b) pay a down payment of P50,000 and pay the balance on equal installments of P50,000 annually for the next 4 years?

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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2. ABC Realty sold a piece of land for P250,000. A down payment of P50,000 was made and the remainder is to be paid in equal semiannual installments, the first due 6 months after the date of sale. The interest is 8% compounded semiannually and the debt is to be amortized in 5 years. a. How much semiannual payment is required? b. What will the total amount of the payment be? c. How much interest will be paid? d. What is the total cost of the property? e. Prepare an amortization schedule for the present value of the loan after making the down payment.
Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master Industries (the manufacturer) has agreed to accept $23,500 at the end of each of the next 4 years. Based on this deal, how much interest will Grummet pay over the life of the loan?A. $94,000B. $80,000C. $23,500D. $14,000
YOUR PARENTS OBTAIN A 2021 MODEL OF TOYOTA FORTUNER FOR P1,500,000.00. THE AGREED PAYMENT IS 5 YEARS and MONTHLY AMORTIZATION CHARGING THEM 8% INTEREST RATE. TOYOTA REQUIRED A DOWN PAYMENT OF 30%. FIND THE MONTHLY AMORTIZATION. 1. CONSTRUCT AN AMORTIZATION SCHEDULE USING AN EXCEL FORMAT THEN ANSWER THE FOLLOWING QUESTIONS: a) AFTER PAYING FOR 3 YEARS, YOUR PARENTS DECIDED TO PAY THE REMAINING PRINCIPAL BALANCE, HOW MUCH IS THE REMAINING PRINCIPAL BALANCE AT THE BEGINNING OF 4TH YEAR? b) HOW MUCH INTEREST DID YOUR PARENT SAVE BY PAYING AT THE REMAINING PRINCIPAL AMOUNT AT THE START OF 4TH YEAR? c) IF THEY DECIDED NOT TO PAY THE PRINCIPAL STARTING ON THE 4TH YEAR AND CONTINUE PAYING THE MONTHLY AMORTIZATION UNTIL THE END OF TERM, HOW MUCH IS THE TOTAL INTEREST PAID?
Antique Accents projects that demand for its services will rise for a period of four years before subsiding. It can lease additional communication equipment for $1,300 at the beginning of every quarter year for four years. Alternatively, it can purchase the equipment for $22,500 at 3.50% compounded quarterly. The salvage value of the equipment after four years is expected to be $3,900. a) Which option would you recommend? O Purchase the equipment. O Lease the equipment. b) In current dollars, how much better is that option? For full marks your answer(s) should be rounded to the nearest cent. Current dollars saved = $ 0.00
One Company has offered a small company two method by which to pay for some needed roof repairs. Method 1 involves a payment of $16500 as soon as the job done, i.e.,now. Method 2 allows the company to defer payment for 2 years, at which time a payment of $26400 would be required. If the interest rate is 12% per year, make your decision which method is better than another and why?
You need a particular piece of equipment for your production process. An equipment - leasing company has offered to lease the equipment to you for $ 9 comma 500 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic life of 5 years). If your discount rate is 6.7%. what should you do? Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 negative $ 40 comma 800 negative $ 2 comma 200 negative $ 2 comma 200 negative $ 2 comma 200 negative $ 2 comma 200 negative $ 2 comma 200 Question content area bottom Part 1 The net present value of the leasing alternative is $ enter your response here. (Round to the nearest dollar.)
Catarina bought a residential unit in XYZ Real Estate Co. amounting to 20,000,000. The said unit has a term of: 5,000 reservation fee, 20% down payment payable in 3 years, and the rest of the contract price payable in 20 years. Compute for the annual amortization for the next 10 years.
An owner of the ATRIUM Tower Office Building is currently negotiating a five-year lease with ACME Consolidated Corporation for 20,000 rentable square feet of office space. ACME would like a base rent of $11 per square foot (PSF) with step-ups of $1 per year beginning one year from now. Required: a. What is the present value of cash flows to ATRIUM under the above lease terms? (Assume a 10% discount rate.) b. The owner of ATRIUM believes that base rent of $11 PSF in (a) is too low and wants to raise that amount to $15 with the same $1 step-ups. However, now ATRIUM would provide ACME a $53,000 moving allowance and $130,000 in tenant improvements (Tls). What would be the present value of this alternative to ATRIUM? c. ACME informs ATRIUM that it is willing to consider a $14 PSF with the $1 annual stepups. However, under this proposal, ACME would require ATRIUM to buyout the one year remaining on its existing lease in another building. That lease is $6 PSF for 20,000 SF per year. If ATRIUM…
Cullumber Excavating Inc. is purchasing a bulldozer. The equipment has a price of $99,800. The manufacturer has offered a payment plan that would allow Cullumber to make 10 equal annual payments of $19,900.00, with the fırst payment due one year after the purchase. How much total interest will Cullumber pay on this payment plan? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Total interest $4
A builder is offering $137,381 loans for his properties at 9 percent for 25 years. Monthly payments are based on current market rates of 9.5 percent and are to be fully amortized over 25 years. The property would normally sell for $150,000 without any special financing. Required: a. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan? Assume that the buyer would have the loan for the entire term of 25 years. Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) b. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan if the property is resold after 10 years and the loan repaid? Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)
A project contractor needs P500,000 for his operation. One financial institution is willing to lend him the money for one year at 12.5% interest per annum (discounted). Another lender is charging 14%, with the principal and interest payable at the end of one year. A third financier is willing to lend him P500,000 payable in 12 equal monthly installments of P46,000. Which offer is best for him?
A contractor’s price for a new building was $96,000. You decide to buy the building, making a payment of $12,000 down and financing the balance by making equal payments at the end of every 6 months for 12 years. Interest is 7.3% compounded semi-annually. B) For the first payment period, how much interest is paid, how much of the principal is repaid, and what is the loan balance at the end of first installment? how much interest is paid how much of the principal is repaid what is the loan balance? C) For the fifteen payment period, how much interest is paid, how much of the principal is repaid, and what is the loan balance at the end of first installment? how much interest is paid how much of the principal is repaid what is the loan balance?

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