What is the effective interest rate that dealership earning

Assignment Help Accounting Basics
Reference no: EM132719725

Question - An auto dealership is advertising that a new car with a sticker price of $33,408 is on sale for $25,995 if payment is made in full, or it can be financed at 0% interest for 72 months with a monthly payment of $464. Note that 72 payments × $464 per payment = $33,408, which is the sticker price of the car. By allowing you to pay for the car in a series of payments (starting one month from now) rather than $25,995 now, the dealer is effectively loaning you $25,995. If you choose the 0% financing option, what is the effective interest rate that the auto dealership is earning on your loan?

Reference no: EM132719725

Questions Cloud

Record the general journal entry to establish partnership : Y. Read and T. Kent, decide to start up a partnership by investing $20 000 each. Record the general journal entry to establish the partnership.
Discuss the most significant risks of bond investing : What is a bond? How is the price of a bond determined? How do interest rates impact a bond's price?
Compute what amount of the amt credit that can be claimed : Dawson Inc. had regular tax due if $35,000 for the tax year ending December. Compute What is the amount of the AMT credit that can be claimed in 2019?
Significant risks of bond investing : What is a bond? How is the price of a bond determined? How do interest rates impact a bond's price?
What is the effective interest rate that dealership earning : If you choose the 0% financing option, what is the effective interest rate that the auto dealership is earning on your loan
What is multifactor authentication : What is multifactor authentication and what are some examples?
What is the annuity worth to today : If you feel that the appropriate discount rate is 13%, what is the annuity worth to today? You are offered an annuity that will pay K24,000 per year for 11 year
What is the apv of the new investment project : What is the APV of the new investment project (NPV of the new investment plus the NPV of mispricing) if the manager knows that the true state of the world is St
Compute the maturity value of the loan : On December 31, 2019, GAO recorded $79,739 to Bond Interest Expense and $39,739 to Bonds Payable. Compute the maturity value of the loan

Reviews

Write a Review

Accounting Basics Questions & Answers

  No-par common stock with a stated value

DeLong Corporation was organized on January 1, 2017. It is authorized to issue 10,000 shares of 8%, $100 par value preferred stock, and 500,000 shares of no-par common stock with a stated value of $2 per share. The following stock transactions wer..

  Prepare the profits and loss appropriation account showing

Prepare the profits and loss appropriation account showing the distribution of profit among the partner in case the profit for the year 2017 -18 are 278000

  Institute of management accounting

Institute of Management Accounting

  The president wants to know how you determine whether or

at the completion of the darby department store audit the president asks about the meaning of the phrase in conformity

  What amount will be reported in the balance sheet

What amount will be reported in the balance sheet of Nana Company for the investment in Papa at December 31, 2018

  Discuss the some changes may be in order

In fact, the FASB at one point discussed some changes may be in order. Historically, earnings have been the main measurement of profitability of a firm.

  What is the purpose of perpetual inventory method

What is Net Income and the purpose of it? Also what is the purpose of Perpetual Inventory Method?

  Prepare the adjusting entry on june

On June 1, Melendez Company borrows $90,000 from First Bank on a 6-month, $90,000, 12% note. Prepare the adjusting entry on June 30

  Prepare a schedule of distribution of income sssumimg

Prepare a schedule of distribution of income sssumimg that there was a net loss of 30,000 in 2016.

  Determine the total cost that should have been recorded

On May 21, Christine, while working on Job A-1 used $27 of indirect material. Determine the total cost that should have been recorded

  Assess the impact on the us stock market

Assess the impact on the U.S. stock market when the Federal Reserve increases the money supply, and whether or not you believe the impact is predictable.

  What amount princess company record as cost of the asset

Princess Company agreed with another company to exchange. What amount should Princess Company record as cost of the asset received in exchange?

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!

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