Quantitative Problem: You need $11,000 to purchase a used car. Your wealthy uncle is willing to...

Quantitative Problem: You need $11,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 4 years, with the first payment to be made one year from today. He requires a 9% annual return.

What will be your annual loan payments? Do not round intermediate calculations. Round your answer to the nearest cent.
$
How much of your first payment will be applied to interest and to principal repayment? Do not round intermediate calculations. Round your answers to the nearest cent.
Interest: $

Principal repayment: $

Solutions

Expert Solution

calc:

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Quantitative Problem: You need $10,000 to purchase a used car. Your wealthy uncle is willing to...

Quantitative Problem: You need $10,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 5 years, with the first payment to be made one year from today. He requires a 5% annual return. What will be your annual loan payments? Do not round intermediate calculations. Round your answer to the nearest cent. $ How much of your first payment will be...

You are given an old car by your uncle, who wants you to keep it in...

You are given an old car by your uncle, who wants you to keep it in working condition so that you can hand it off to your younger brother in three years. It will cost you $1,500 per year to keep it in working condition for your brother. If you skip maintenance altogether, the car will die after two years, but you can pocket the maintenance costs. a. What will you be tempted to do? Not do the maintenance, because...

Your wealthy industrialist brother is trying to persuade your retired uncle to buy shares in puma...

Your wealthy industrialist brother is trying to persuade your retired uncle to buy shares in puma Energy Limited which is listed on stock market? He himself owns a few thousand and is impressed by the steady rise in the price. Your uncle is skeptical because puma Energy pays out a very small dividend.Required: (i)What arguments is your cousin likely to make to your uncle? (ii)Are the arguments valid in this case?

I need to know about equations used and how to by hand! A. Quantitative Problem 1:...

I need to know about equations used and how to by hand! A. Quantitative Problem 1: Assume today is December 31, 2013. Barrington Industries expects that its 2014 after-tax operating income [EBIT(1 – T)] will be $400 million and its 2014 depreciation expense will be $60 million. Barrington's 2014 gross capital expenditures are expected to be $100 million and the change in its net operating working capital for 2014 will be $30 million. The firm's free cash flow is expected...

You are deciding whether to lease or purchase a car. If you lease the car, your...

You are deciding whether to lease or purchase a car. If you lease the car, your annual payments will be $7,400 for the next four years (due at year end). If you buy the car, you will pay $30,000 to purchase the car. You estimate the car will have a resale value of $12,000 at the end of four years. Assume the appropriate discount rate is 10%. Should you lease or buy the car? To answer this question, assume the...

Your local auto store is willing to lease you a new car for $254 a month...

Your local auto store is willing to lease you a new car for $254 a month for 66 months. Payments are due on the first day of each month starting with the day you sign the lease. Using an APR of 8.50% compounded semi-annually, what is the present value of the lease? Question 1 options: $12,822 $13,160 $13,497 $13,834 $14,172

When you purchase a car, you may consider buying a brand-new car or a used one....

When you purchase a car, you may consider buying a brand-new car or a used one. A fundamental trade-off in this case is whether you pay repair bills (uncertain at the time you buy the car) or make loan payments that are certain. Consider two cars, a new one that costs $15,000 and a used one with 75,000 miles for $5,500. Let us assume that your current car’s value and your available cash amount to $5,500, so you could purchase...

Suppose you are in the market to purchase a used car. To make an informed decision...

Suppose you are in the market to purchase a used car. To make an informed decision regarding your purchase, you would like to collect as much information as possible. Among the information you might consider are the typical price of the car, the typical number of miles the car should have, and its crash test results, insurance costs, and expected repair costs. Make a list of at least three cars that you would consider purchasing. To be fair, the cars...

Suppose that you wish to purchase a car and that your bank is offering to you...

Suppose that you wish to purchase a car and that your bank is offering to you a loan. You wish to explore the nature of this loan and the payments that you would have to make given certain circumstances such as the amount that you borrow. Fortunately, Excel offers a function (PMT) that calculates the payment for a loan based on constant payments and a constant interest rate. The syntax of the function is: PMT(rate, nper, pv) where rate is...

You are planning to purchase a new car explain whether it is to your advantage to...

You are planning to purchase a new car explain whether it is to your advantage to lease or buy your new car, and why. What did you have to consider about your personal circumstances before making this decision? What are the potential drawbacks of your decision?

Subjects