You are trying to decide between two mobile phone carriers. Carrier A requires you to pay $180 for the phone and then monthly charges of $64 for 24 months. Carrier B wants you to pay $90 for the phone and monthly charges of $72 for 12months. Assume you will keep replacing the phone after your contract expires. Your cost of capital is 3.9%. Based on cost alone, which carrier should you choose?Based on cost alone, you will choose Carrier A(Select from the drop-down menu.)Carrier BCarrier A

In this question one way to analyse which option is better can be done by calculating present value…

u are trying to decide between two mobile phone carriers. Carrier A requires you to pay $180 for the phone and then monthly charges of $64 for 24 months. Carrier nths. Assume you will keep replacing the phone after your contract expires. Your cost of capital is 3.9%. Based on cost alone, which carrier should you choose? wants you to pay $90 for the phone and monthly charges of $72 for sed on cost alone, you will choose Carrier A. (Select from the drop-down menu.) Carrier B Carrier A

u are trying to decide between two mobile phone carriers. Carrier A requires you to pay $180 for the phone and then monthly charges of $64 for 24 months. Carrier nths. Assume you will keep replacing the phone after your contract expires. Your cost of capital is 3.9%. Based on cost alone, which carrier should you choose? wants you to pay $90 for the phone and monthly charges of $72 for sed on cost alone, you will choose Carrier A. (Select from the drop-down menu.) Carrier B Carrier A

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

You went to the car dealer to lease a car. The car is valued at $30,000 and you can drive away without putting any money down. The dealer offers you a 5 year lease with a $5,000 residual payment at the end if you want to buy the car. Assuming monthly payments of $508.32, what is the implied APR? Your answer should be close to a round number. Use a % symbol and round to the nearest 1 decimal point.....3.0% would be the form of a correct answer.
You open a new business and need a new laptop computer. You decide on a Knox Computer Solutions for $1499 due to the business software that is included. If the sales tax is 4.25% of the purchase price and you finance the total cost, including sales tax, for 3 years at the annual interest rate of 8.4%, find the monthly payment amount.
You want to by a boat and can afford payments of $350 per month for six years. The monthly interest rate is 0.5%. (a) What is the maximum you can spend on the boat if there is no down payment? (b) What is the maximum you can spend on the boat if you make a down payment of $6000 at the time of purchase? 4. A company needs to buy a building in 4 years, and must fund the down payment from its profits. The purchase will cost $280,000, of which the company can finance (borrow from the bank) $200,000 at 7%. If the company must make the purchase in 4 years and can receive 7% APR on its savings compounded annually, how much must the company save each year to have the required down payment in 4 years?
You want to purchase a new company car for employees to visit clients. If you purhcase the car for $60,000 with a loan that has an APR of 12% in which interest accrues monthly, what would you expect the monthly payments to be if the term of the loan is 5 years? $1,683 $572 $1,322 $1,000
Two plans are available for a company to obtain automobiles for its salesmen. How many miles must the cars be driven each year for the two plans to have the same costs? Use an interest rate of 10%. Plan A: Lease the cars and pay $0.28 per mile. Plan B: Purchase the cars for $6000 and economic life of three years, after which it can be sold for $1999. Gas and oil cost $0.05 per mile. Insurance is $500 per year
You want to purchase an automobile for $22,800. The dealer offers you two options. Option 1 is 0% financing for 48 months. Option 2 offers 2.9% financing for 72 months. A) Compute the monthly payments for each option. Show work to justify your answer. N 1% PV PMT FV P/Y C/Y Option 1: Monthly Payment is: Option 2: Monthly Payment is: N 1% PV PMT FV P/Y C/Y B) Compute the total cost for each option. Show work to justify your answer.
You agree to purchase a car with a competitive value of $44,500 for the following loan contract: Purchase the car for $44,250 with $2,000 down and borrow the remainder over 5 years with monthly payments based on a rate of interest of 6.6%. Your market rate of return is 5.25%. How much value did you destroy with this purchase? (Round to dollars and cents; round the car payment to dollars and cents.)
Your firm is considering the purchase of equipment from two suppliers. Supplier A requires payment of $5500 today for each machine. Supplier B requires a payment of $5600 in 6-months for each machine. If you earn 5% APR compounded monthly, and if both suppliers deliver the exact same machines today and have same warranty, etc... which supplier is offering the better financial terms to your firm? A) Supplier A because $5500 > $5600 B) Supplier A, because the FV of $5500 is $5638.94 which is greater than $5600 C) Supplier B, because the PV of $5600 is $5462, which is less than $5500 D) Supplier B, because the PV of $5600 is $5462, which is less than $5600
You are trying to decide between two mobile phone carriers. Carrier A requires you to pay $195 for the phone and then monthly charges of $62 for 24 months. Carrier B wants you to pay $90 for the phone and monthly charges of $68 for 12 months. Assume you will keep replacing the phone after your contract expires. Your cost of capital is 4.4% APR, compounded monthly. Based on cost alone, which carrier should you choose? The EAA for plan A is $ (Round to the nearest cent.)
You have just purchased new goods worth 10,000 EUR from your supplier. Your supplier offers you to pay within 45 days. If you pay within the first 10 days, you get a discount of 1.3%. You know that he might accept a delay of 2 days, but if you pay later than day 47, you will most likely get an additional fee of 550 EUR. You need your next delivery in 60 days and you know he will not deliver the new goods unless you pay the outstanding invoice. When would you pay? Why? What is the effective interest rate?
You have been offered a contract to work as a consultant. The company will pay you $6215 per month. In addition, once you complete the work in 4 years, you will receive $46865. Your required return is 6.57%, what is this contract worth today? show all step and fomular. Answer

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