Reference no: EM133028013

Question -

Q1. A college student asks for money in his graduation year to buy a car. Because he is not yet employed, he makes no payments for 6 months until he finds a job, and makes an agreement with the car dealer that he will pay what he owes over the next 3 years. If the original debt is $125,000 and the interest is 3.5% per month on the unpaid balance. Before it starts to go out, how much do you owe?

Q2. A lottery is held in Mexico where the main prize is $111,111.11 each month for 15 years. The interest rate at the bank is 7.5% per annum. If you were offered $10,500,000 in cash today, would you accept it? You are asked to use the financial formulas to make your decision and decide correctly considering the time value of money.

Q3. Máximo Tostado, a father, promised his daughter that on her 15th birthday he would throw her a party and also give her a 30-day trip to Europe. According to his research, fulfilling his promise will cost him $250,000, so he has decided to save at the end of each month a certain amount that will allow him to fulfill his promise. If the interest rate is 8.5% per annum compounded monthly and her daughter has just turned 10, determine: If the monthly deposits were made at the beginning of the month, how much would she have to save each month?