Compute the APR and EAR of both loans

Assignment Help Financial Management

Reference no: EM13806141

You decide to borrow $100,000 with a choice of two 4-year loans:

Plan A requires quarterly payments of $3,100 for the first year, $7,100 for the second and third year, and $11,100 for the fourth year.

Plan B requires quarterly payments of $11,000 for the first year, $7,000 for the second and third year, and $3,000 for the fourth year.

{a} Compute the APR and EAR of both loans.

{b} Which loan should you take and why?

Reference no: EM13806141

Questions Cloud

What annual rate of return is she expecting : An individual has $1,100,000 in a retirement account. at the beginning of each mint she plans to withdraw $10,000 for the next 30 years depleting the account, what annual rate of return is she expecting? if she is only able to earn 8% a year on her m..

What is the yield to maturity-Treasury STRIPS : A Treasury STRIPS is quoted at 68.533 and has 4 years until maturity. What is the yield to maturity?

What is the return from the investment : A parent decides to buy a two bedroom condo for 65,000 by putting 10% down and financing the rest for 15 years at an annual rate of 3.5%. What is the monthly payment? One bedroom rented out to a roomTe for $400 a month. After 4 years, the parent Ella..

Calculate mean-variance and sharpe ratio of cash flows : Calculate mean, variance, and Sharpe ratio of the following cash flows. a 25% probability of making $1000, a 20% probability of making $200, a 10% probability of making $100, and a 45% probability of making nothing

Compute the APR and EAR of both loans : Plan B requires quarterly payments of $11,000 for the first year, $7,000 for the second and third year, and $3,000 for the fourth year. Compute the APR and EAR of both loans. Which loan should you take and why?

Find the garbled number : On the evening’s financial news broadcast, the reporter states Last prices fell by 0.5%. This is an annual rate of deflation of #%&@* percent. Find the garbled number.

What is the maximum constant amount : In order to save for his retirement, Dale Falcinelli makes the first of 8 equal annual deposits into an investment on June 6, 2014.He believes the investment will always earn 10% a year. The last deposit will be made on June 6, 2021. What's the maxim..

Find the value today of a perpetual annuity : Find the value today of a perpetual annuity that pays $1.75 per quarter starting on the last day of quarter 15 (the end of the third quarter of the 4th year) assuming an interest rate of 6% a year, compounded quarterly.

Contemplating replacing some existing equipment : Ace Software, Inc. is contemplating replacing some existing equipment with some new hardware. The existing equipment, carried on the books at $800, is being depreciated using the straight-line method to a salvage value of $80 over its remaining life ..

User Account

All Pages