About the payment plan, You would like to purchase a $1,000

About the payment plan

Assignment Help Financial Management

Reference no: EM131300341

You would like to purchase a $1,000 sofa from Honest Furniture store. The owner, Mr. Honest, says he will work with you to arrange a payment plan over the next 12 months He says he normally charges 12% interest per year and calculates the interest on $1,000 at 12 as $120. which makes the total $1120. He then divides $1,120 by 12 months, which makes the monthly payment $93.33. He then says, "I feel generous today, just pay me $90 at the end of each month for a year." Perform the necessary analysis and determine whether there is anything wrong with this deal and Mr. Honest's statements.

Reference no: EM131300341

Questions Cloud

The gain is split evenly between two parties : Company A can borrow Yen 10.6% and dollars at 9.3%. Company B can borrow yen at 9.1% and dollars at 8.8%. If the financial intermediary charges a fee of .15% what is the gain to each party to the swap. The gain is split evenly between the two parties..

What is the implied return on the company stock : Sully Corp. currently has an EPS of $2.61, and the benchmark PE ratio for the company is 25. Earnings are expected to grow at 5 percent per year. What is your estimate of the current stock price? What is the target stock price in one year? Assuming t..

Balance sheet reflects market values of target proportions : The following balance sheet reflects market values of the target proportions of Firm A’s capital structure. Assets $256,334 Debt $ 87,154 Pref Stk $ 25,633 Com. Stk $143,547 Firm A plans to finance the planned projects from the following sources: Deb..

What was the return for an investor who bought the stock : In September of 1984, Apple’s stock was trading at $3.36. In September of 2012 it was trading at $700.26. What is the return for an investor who bought the stock in 1984? In February of 2008, AIG’s stock was trading at $937.20. In February 2009, the ..

About the payment plan : You would like to purchase a $1,000 sofa from Honest Furniture store. The owner, Mr. Honest, says he will work with you to arrange a payment plan over the next 12 months He says he normally charges 12% interest per year and calculates the interest on..

What is the current dollar price assuming per value : Harrison Co. issued 14-year bonds one year ago at a coupon rate of 7.9 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.6 percent, what is the current dollar price assuming a $1,000 par value?

What is the enterprise value multiple : Preston Woods has 17,500 shares of stock outstanding along with $408,000 of interest bearing debt. The market and book values of the debt are the same. The firm has sales of $697,000 and a profit margin of 6.8 percent. The firm has $130,000 of curren..

Purchase shares of wan stock : Amanda owns an option which gives her the right to purchase shares of WAN stock at a price of $22 a share. Currently, WAN stock is selling for $25. She would like to profit on this option but is not permitted to exercise it for another two weeks. She..

What is her net gain or loss on this investment : Assume your cousin purchased five WXO 23 call option contracts at a quoted price of $.34. What is her net gain or loss on this investment if the price of WXO is $28 on the option expiration date?

User Account

All Pages