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Ramon Hernandez saw the following advertisement for a used Volkswagen Bug and decided to work out the numbers to be sure the ad had no errors.
Cash price $7,950
Down payment $0
Annual percentage rate 14.53%
Deferred price $11,223.60 or 60 payments at $187.06 per month
a. Calculate the amount financed.
Amount financed $
b. Calculate the finance charge. (Do not round intermediate calculations. Round your answer to the nearest cent.)
Finance change $
c. Calculate the APR by formula. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 1 decimal place.)
APR by formula %
Consider a pair of at-the-money European call and a put options written on the same non-dividend-paying stock with the same maturity.
Assume that you bought an interest rate cap on three- month LIBOR with a 2.50 percent strike rate. The current rate for three- month LIBOR is 2.28 percent. a. What will happen to the premium (value) on this cap if LIBOR rises to 3.16 percent? Explain..
Smith Company and Jones Company each sell 12,000 bottles at $ 3.00 per bottle. Production costs are $9,000 fixed costs plus $1 per bottle. Calculate the operating income (EBIT) for both companies. Using the information in Exercise 1, calculate the ea..
RAK, Inc., has no debt outstanding and a total market value of $220,000. Earnings before interest and taxes, EBIT, are projected to be $26,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 15 percen..
Define target population, accessible population, law of large numbers, sampling methods, or sampling techniques, or sampling procedures and simple random sampling.
Currently Schultz makes a lawnmower and also makes the engine that is used for this model.
Is the D/E ratio (target capital structure) that maximizes value for one firm going to be the same for all firms? Explain specifically why it would be the same or vary for different firms and industries
Shanken Corp. issued a 10-year, 6 percent semiannual bond 2 years ago. The bond currently sells for 95 percent of its face value. The company's tax rate is 35 percent. What is the pretax cost of debt? Which is more relevant, the pretax or the afterta..
Murphy Toys Inc., a U.S.-based MNC, has screened several targets. Based on economic and political considerations, only one eligible target remains in Malaysia. Prepare a worksheet to estimate the value of the Malaysian target based on the information..
You invest in a portfolio of 5 stocks with an equal investment in each one. The betas of the 5 stocks are as follows: .75, -1.2, .90, 1.3, 1.5. The risk free return is 4% and the market return is 9%. (Not a multiple choice problem) Compute the beta o..
Your company has spent $220,000 on research to develop a new computer game. The firm is planning to spend $42,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $5,..
Assume that stock market returns do not resemble a single-index structure. (a) Assume that stock market returns do not resemble a single-index structure. An investment fund analyzes 2,000 stocks in order to construct a mean-variance efficient portfol..
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