PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
7th Edition
ISBN: 9780357033647
Author: Billingsley
Publisher: CENGAGE L
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Chapter 7, Problem 11FPE
Deciding whether to pay cash or finance a purchase. Use Worksheet 7.2. Matilda Edwards wants to buy a home entertainment center. Complete with a big-screen TV, DVD, and sound system, the unit would cost $4,500. Matilda has over $15,000 in a
Matilda wants to know whether she should pay cash for the home entertainment center or buy it on time. (Note: While Matilda is in the 22 percent tax bracket she does not itemize deductions on her tax returns.) Briefly explain.
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(Solving
for r with
annuities)
Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent, who believes that Nicki is an older woman ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her an annual fixed income. The annuities are as follows in the popup window:
LOADING...
.
If Nicki could earn
11
percent on her money by placing it in a savings account, should she place it instead in any of the annuities? Which ones, if any? Why?
a. What rate of return could Nicki earn on her money if she place it in annuity A with
$7,000
payment per year and
10
years duration?
nothing%
(Round to two decimal places.)
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Data Table
ANNUITY
INITIAL
PAYMENT INTO
ANNUITY
(AT t = 0)
AMOUNT OF
MONEY
RECEIVED PER
YEAR
DURATION
OF ANNUITY
(YEARS)
A
$40,000…
how do you do this and what is the answer?
The Browning family of Colorado wants to buy a $102,000 house.
(a) If they can get a loan of 80% of the value of the house, what is the amount of the loan?$ (b) What will be the down payment on this loan?$ (c) If they decide to obtain an FHA loan, what will be the minimum cash investment? (Do not forget that the maximum FHA loan for this location has to be determined using the FHA Maximum Loan Values by State table.)$
Chapter 7 Solutions
PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
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