5-5 TIME TO REACH A FINANCIAL GOAL You have $33,556.25 in a brokerage account, and you

You can buy a car that is advertised for $24,600 on the following terms: (a) pay $24,600 and receive a $4,600 rebate from the ma

Vadim26 [7]

Answer:

A. $20,000

B. $17,234.18

C.Option (b)

Explanation:

Obviously, the option with lower Present Value would be the best option to buy the car. The Present Value of the options can find out as following

REQUIREMENT A

Price of car = $24,600

Rebate = $4,600

Present value of the payments for option = Price of the car – rebate

Present value of the payments for option (a) = $24,600 - $4,600

Present value of the payments for option = $20,000

REQUIREMENT B

We can use the following Present Value of an Annuity formula to calculate the present value of the payments

PV of the payments for option = PMT * [1-(1+i) ^-n)]/i

PV of the payments for option (b) (PV) =?

Monthly payment PMT =$410 per month

Number of payments n = 5 years *12 months = 60

Monthly interest rate i=1.25% per month or 0.0125

PV of the payments for option = $410 x [1- (1+0.0125) ^-60]/0.0125

PV of the payments for option = $17,234.18

REQUIREMENT C.

Which is the better deal?

Option (b) is better deal as the present value of payments ($17,234.18) is less than Present value of the payments for option (a); $20,000.

3 0

3 years ago

QUESTION 11 Given the following information, calculate the equity dividend rate for this investment: first-year NOI: $18,750; be

Alja [10]

Answer: D. 2.2%

Explanation: Equity Dividend Rate is calculated by dividing the Before Tax Cash Flow by the Acquisition price. If you need the answer in percentage form, you then multiply by 100.

Here, before-tax cash flow = $11,440

Acquisition price = $520,000

So Equity Dividend Rate = $\frac{11440}{520000}$ X 100

Equity Dividend Rate = 2.2%

In this question, you do not need the Net Operating Income (NOI). You only need the NOI if the Before Tax Cash Flow is not given and the debt service payment is. If this is the case, you subtract the debt service payment from the NOI to get the Before Tax Cash Flow.

4 0

3 years ago

Which of the following is a false statement? Brokers are paid a fee for their agent services; dealers earn the bid-asked spread

Natalka [10]

Answer:

less volatile the price of a security, the wider the bid-asked spread.

Explanation:

From the answers listed in the question the one that would be considered false would be that the less volatile the price of a security, the wider the bid-asked spread. This is because the bid-asked spread usually depends on the liquidity of the asset, when the asset has a large enough liquidity which causes the volatility to be low the bid-asked spread becomes very narrow since there is not much demand for buyers willing to pay higher prices for the asset in question. The opposite occurs if an asset is very popular and volatility is high which creates a much wider bid-asked spread.

3 0

3 years ago

Another term for "food poisoning" is?

disa [49]

Answer:

botulism. salmonella.

Explanation:

7 0

2 years ago

Read 2 more answers

Harmony Company sells hand-knit scarves. Each scarf sells for $40. The company pays $60 to rent vending space for one day. The v

Nataly_w [17]

Answer:

B) 3 scarves

Explanation:

total fixed costs per day = $60 (rent)

selling price per scarf = $40

variable cost per scarf = $15

contribution margin = selling price per unit - variable cost per unit = $40 - $15 = $25

break even formula in units = total fixed costs / contribution margin = $60 / $25 = 2.4 units, since you can only sell complete units, the break even amount is 3 scarves.

8 0

3 years ago