Question

2. You want to buy a new car 3 years from now, and you plan to...

2. You want to buy a new car 3 years from now, and you plan to save $1,000 per month, beginning today. You will deposit your savings in an account that pays a 3.6% annual interest. How much will you have 3 years from now?

A. $43, 201.80

B. $35,179.30

C. $38, 069.70

D. $27, 338.30

3. Dell computer has two promotions to sell its $3,000 laptop computers. One promotion is the low interest rate loan (the nominal annual interest rate is 1.2% for 2 years, monthly compounding) and the other one is the cash rebate. Two promotions should be indifferent for the buyers. If John chose to apply for the 1.2% amortized loan (2 years, monthly payments) to buy the computer, what's his monthly payment?

A. $144.61

B. 126.57

C. 1527.05

D. 251.63

4. Based on the Dell computer promotion, if Smith chose to pay cash at one time and get cash back. How much should he actually pay to buy the computer? If we assume the current market rate i = 9%

A. 3,000

B. 2,578.54

C. 2,688.78

D. $2,770.50

5. If Company A offers a similar laptop as Dell computer stated in Question 8, but has a different sales promotion (10% discount for the original sales price $3,000). Which laptop do you prefer to buy?

A. The laptop from Dell

B. The laptop from Company A

Homework Answers

Answer #1
2) C. $38, 069.70
Value of money 3 years from now = Monthly Cash flow * Future Value of annuity of 1
= $   1,000.00 * 38.0697
= $ 38,069.70
Working:
Future Value of annuity of 1 = ((((1+i)^n)-1)/i)*(1+i) Where,
= ((((1+0.003)^36)-1)/0.003)*(1+0.003) i = 3.6%/12 = 0.003
=         38.0697 n = 3*12 = 36
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Three-part Question: Part A - Dell computer has two promotions to sell its $3,000 laptop computers....
Three-part Question: Part A - Dell computer has two promotions to sell its $3,000 laptop computers. One promotion is the low interest rate loan (the nominal annual interest rate is 1.2% for 2 years, monthly compounding) and the other one is the cash rebate. Two promotions should be indifferent for the buyers. If John chose to apply for the 1.2% amortized loan (2 years, monthly payments) to buy the computer, what's his monthly payment? A. $144.61 B. 126.57 C. 1527.05...
4. You want to buy a new car in 3 years which will cost $42,000. You...
4. You want to buy a new car in 3 years which will cost $42,000. You plan to get a 5-year car loan at a 6% interest rate but don’t want your monthly payments to be over $300. You plan to save the rest needed by making monthly deposits into the bank, earning 7.5% on your money. How much do you need to save monthly over the next 3 years to reach your goal? 6. You are buying a new...
You want to buy a new ski boat 2 years from now, and you plan to...
You want to buy a new ski boat 2 years from now, and you plan to save $7,000 per year, beginning one year from today. You will deposit your savings in an account that pays 6.2% interest. How much will you have just after you make the 2nd deposit, 2 years from now? $17,609 $14,434 $14,290 $15,156 $16,599
Answer these 2 separate questions: 1) You want to buy a new sports car from Muscle...
Answer these 2 separate questions: 1) You want to buy a new sports car from Muscle Motors for $36,000. The contract is in the form of a 72-month annuity due at a 6.50 percent APR.    Required: What will your monthly payment be? 2) You are looking at a one-year loan of $15,000. The interest rate is quoted as 9 percent plus 3 points. A pointon a loan is simply 1 percent (one percentage point) of the loan amount. Quotes...
You want to buy a $203,000 home. You plan to pay 15% as a down payment,...
You want to buy a $203,000 home. You plan to pay 15% as a down payment, and take out a 30 year loan at 4.3% annual interest compounded monthly for the rest. a) How much is the loan amount going to be? $ b) What will your monthly payments be? $ c) How much total interest do you pay? $ d) Suppose you want to pay off the loan in 15 years rather than 30. What will your monthly payment...
You want to buy a $233,000 home. You plan to pay 5% as a down payment,...
You want to buy a $233,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan for the rest. a) How much is the loan amount going to be? $ b) What will your monthly payments be if the annual interest rate is 6%? $ c) What will your monthly payments be if the annual interest rate is 7%? $
You want to buy a $183,000 home. You plan to pay 15% as a down payment,...
You want to buy a $183,000 home. You plan to pay 15% as a down payment, and take out a 30 year loan for the rest. a) How much is the loan amount going to be? $ b) What will your monthly payments be if the annual interest rate is 6%? $ c) What will your monthly payments be if the annual interest rate is 7%? $
You want to buy a brand new Tesla Model S car. The dealer offers you 3...
You want to buy a brand new Tesla Model S car. The dealer offers you 3 payment options: (1) Make monthly payments of $2,325 over a period of 3 years at the end of every month. (2) Pay $10,000 upfront, and $65,000 3 years from now. (3) Make 3 equal payments at the end of every year so that the present value is equal to $85,253. Annual interest rate is 12%. Required: Calculate the present value of option (1). Calculate...
. You plan to buy a Ferrari sports car in 5 years. Your dream model costs...
. You plan to buy a Ferrari sports car in 5 years. Your dream model costs $225,000 now and you expected the price to go up 10% per year. To get your dream car, you plan to make a monthly saving starting one month from now for 60 monthly savings. How much do you need to save each month in order to buy the car in 5 years, assuming that the interest rate is 6% (find the answer that is...
You want to buy a new car. You can afford payments of $300 per month and...
You want to buy a new car. You can afford payments of $300 per month and can borrow the money at an annual interest rate of 5.5% compounded monthly for 5 years. How much are you able to borrow? $ How much interest do you pay? $
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT