Reference no: EM131185349
The following are two popular approaches used by automobile dealers:
(a) Cash Rebate Versus Low Rate Dealer Financing You are given two mutually exclusive options from the dealer on a $20,000 car:
(i) $1,500 cash rebate or
(ii) 36-month low rate loan at 3% APR. The prevailing APR on 36-month auto loan from a typical bank is 8%.
Which option is a better deal?
(b) Buying Versus Leasing You are interested in a $25,000 car. A simplified leasing contract includes the following:
(i) up-front cost of $3,000, (ii) $400 monthly lease payment over a 36-month period, and
(iii) purchase cost of $12,000 at the end of the lease. What are the “implied” APR and EAR of the lease?
Should you lease the car or buy and finance the car with a loan from the bank in (a)? <Suggested answer 8.45%; 8.79%>
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Firms cost of goods sold and selling expenses
: During the year, Senbel Discount Tire Company had gross sales of $1.17 million. The firm's cost of goods sold and selling expenses were $536,000 and $226,000, respectively. The firm also had notes payable of $910,000. These notes carried an interest ..
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What is addition to retained earnings-net income for firm
: Shelton, Inc., has sales of $390,000, costs of $178,000, depreciation expense of $43,000, interest expense of $24,000, and a tax rate of 40 percent. What is the net income for the firm? What is the addition to retained earnings?
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What was the firms operating cash flow
: During the year, the Senbet Discount Tire Company had gross sales of $1.17 million. The firm’s cost of goods sold and selling expenses were $536,000 and $226,000, respectively. The firm also had notes payable of $910,000. What was the firm’s operatin..
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Determine the project after-tax net present worth
: A corporate expects to receive $35638.0 each year for 15 years if a particular project is undertaken. There will be an initial investment of $104820.0. The expenses associated with the project are expected to be $7440.0 per year. Assume straight-line..
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Two popular approaches used by automobile dealers
: The following are two popular approaches used by automobile dealers: Buying Versus Leasing You are interested in a $25,000 car. A simplified leasing contract includes the following: purchase cost of $12,000 at the end of the lease. What are the “impl..
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Maximum annual withdrawal from the investment account
: Lee plans to retire in 22 years with a nest egg of $8M. He has already saved $500,000 in an investment account that generates a nominal rate of return of 12%, compounded quarterly. Numerically show that whether Lee’s investment account balance will r..
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Aboriginal trackers were each promised the equivalent
: In 1880 five aboriginal trackers were each promised the equivalent of 50 Australian dollars for helping to capture the notorious outlaw Ned Kelley. In 2003 the granddaughters of two of the trackers claimed that this reward had not been paid. How much..
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Controls contributed to the occurrence and size of losses
: One of the largest losses in history from unauthorized securities trading involved a securities trader for the French bank, Societe Generale. The trader was able to circumvent internal controls and create over $7 billion in trading losses in six mont..
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What is the addition to retained earnings
: Shelton, Inc., has sales of $396,000, cost of $184,000, depreciation expense of $49,000, interest expense of $30,000, and a tax rate of 35%. What is the net income for the firm? Suppose the company paid out $39,000 in cash dividends. What is the addi..
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