Two salesmen are competing for your business

Assignment Help Financial Management

Reference no: EM131302823

You would like to purchase a new car and two salesmen are competing for your business. The list price of the car you want to buy is $10,000. The first salesman offers you free credit on the car for five years with no money down today. So, you would need to make one payment of $10,000 in five years. The second salesman cannot offer you free credit but instead will give you a discount. With this offer, you make one payment today and receive a 20% discount off the list price.

With a discount rate of 4% compounded annually, what is the value today of purchasing the car if you take the first salesman’s free credit offer? Round your answer to the nearest dollar.

With a discount rate of 4% compounded annually, what is the value today of purchasing the car if you take the second salesman’s price discount offer?

Reference no: EM131302823

Questions Cloud

Perpetuity product from a large financial services firm : You are evaluating a growing perpetuity product from a large financial services firm. The product promises an initial payment of $23,000 at the end of this year and subsequent payments that will thereafter grow at a rate of 0.04 annually. If you use ..

Discuss available automated risk management tools : Discuss available automated risk management tools How could these tools be used in your project? Based on the information provided regarding the PCNet project, was the formation of the RMO effective? Why or why not?

Which output performance standards : Analyze the control systems used by a real organization such as a department store, restaurant, hospital, police department, or small business. Your objective is to uncover all the different ways in which managers monitor and evaluate the perform..

What is the future value of his investment cash flows : Chuck Brown will receive from his investment cash flows of $3,155, $3,500, and $3,850 at the end of years 1, 2 and 3 respectively. If he can earn 7.5 percent on any investment that he makes, what is the future value of his investment cash flows at th..

Two salesmen are competing for your business : You would like to purchase a new car and two salesmen are competing for your business. The list price of the car you want to buy is $10,000. With a discount rate of 4% compounded annually, what is the value today of purchasing the car if you take the..

Write about the four primary sources of law in the us : Write about the Four Primary Sources of Law in the US.Throughout time, criminologists began to ask complex social questions about the nature of crime and criminals. Many of the queries centered around the behavior of criminals, rather than on the c..

Find risk-free rate given that the expected rate of return : Find the Risk-Free Rate given that the Expected Rate of Return on Asset "j" is 9%, the Expected Return on the Market Portfolio is 10%, and the Beta (b) for Asset "j" is 0.8.

Taxes are automatically deducted from each paycheck : Vincent Lecavlier, a Montreal native, played for the Tampa Bay Lightning. He had a ten year contract worth $100 million ($10 million per year). He dreamed of playing for the Montreal Canadians and 4 years into his contract with Tampa Bay, he was trad..

Evolution of the internet and web applications : Using what you've learned about the evolution of the Internet and Web Applications, read the article, "E-health and Web 2.0: The doctor will see tweet you now" and answer the following the questions:

User Account

All Pages