User Account

All Pages

Compute a payment schedule for the loan

Assignment Help Finance Basics
Reference no: EM132381051

Richard is under pressure to find a ride quickly and signed a purchase contract for a new car with salesperson Giorgio Battistelli. Richard can afford to buy the car in cash but Giorgio offers him a financing deal. With his good credit rating and a kingdom of assets to pledge Richard can get an additional £1,000 off if he signs a 36 month loan with monthly payments and an interest rate of 8% APR. Richard can pay the loan off without penalty after 3 month. Assume that the car costs £42,000, so after the additional £1,000 off the financing volume of the loan is £41,000. Richards personal discount rate is 2% p.a EAR.

Compute a payment schedule for the loan: determine the monthly payment (use the annuity formula) and then compute for each monthly payment the interest component, the principal repayment, and the outstanding balance (use Excel for the computation, explain the calculation for the first month on paper

Compute the present value (using Richard's discount rate) of the cost for Richard's three options: (i) buy the car in cash today for £42,000,

(ii) take the loan and repay after 3 months,

(iii) take the loan for the whole 36 months. What is Richard's best option?

Reference no: EM132381051

Questions Cloud

What would the journal entry on the unadj : ABC Company received $ 10,000 cash for services to be performed later. By year end, $ 4,000 had been earned. What would the journal entry on the Unadj.
Write an appsecsolutions document : Identify a targeted business problem that can be supported by an AppSecsolution and Write an AppSecsolutions document that uses AppSecmethodologies to solve
What is the present value of price money : To make calculations easier suppose that today is Jan 1st. You discount rate is 10% p.a. What is the present value of your price money?
Margaritas qbi deduction for 2019 is : Margarita operates a sole proprietorship that earns $100,000 of qualified business income after deducting salaries of $300,000.
Compute a payment schedule for the loan : Compute a payment schedule for the loan: determine the monthly payment (use the annuity formula) and then compute for each monthly payment interest component
How much principal have you paid off after 5 years : The first payment is due in one week's time. How much principal have you paid off after 5 years?
Do you think absorption costing is ethical in the sense : Do you think absorption costing is ethical in the sense that it always reports higher net profit and the net profit is lower when abc costing is used?
What is the beta of yerba stock after transaction : a. What is the beta of Yerba stock after this? transaction? b. What is the expected return of Yerba stock after this? transaction?
Calculate the future value of both investments at the end : A 1,000 dollars investment pays 10 percent compounded annually for 2 years; another pays 10 percent compounded semiannually for 2 years.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd