What is the present value of option

Assignment Help Financial Management
Reference no: EM131848024

Suppose you are selling your car, your asking price is $12,000. One of your friends is looking to buy a car, but his bank approved him only for a $9,000 loan. He really likes your car and offered you 2 payment options: (1) $9,000 cash today, or (2) $1,000 at the end of each month for the next 12 months. What is the present value of option 2, if a similar ordinary annuity currently pays 6% APR with interest accrued monthly?

Reference no: EM131848024

Questions Cloud

Loan principal right after the first monthly payment : What is the outstanding amount of the loan principal right after the first monthly payment?
What is the value of the december call option : Using the ten-step binomial tree, what is the value of the December call option on S&P 500 futures with an exercise price of 1675?
Which company is offering better deal : If the annualized rate of interest (APR) is 12 percent (compounded monthly), which company is offering a better deal?
University be able to earn and spend every year : how much interest will the University be able to earn and spend every year?
What is the present value of option : What is the present value of option 2, if a similar ordinary annuity currently pays 6% APR with interest accrued monthly?
Regarding FPSC Financial Planning Practice Standards : Which of the following is not a legitimate deduction in Canada? Which statement below regarding FPSC Financial Planning Practice Standards is correct?
Maximum price per share Schultz should pay for Arras : What is the maximum price per share Schultz should pay for Arras?
Personal finance lesson : Suppose your parents decided to teach you a personal finance lesson. How much money did your parents give you?
Interest accrued based on simple interest rate terms : Your bank, Bank of America, offered you a savings rate of 0.03% APR, with the interest accrued based on simple interest rate terms.

Reviews

Write a Review

Financial Management Questions & Answers

  Companys stock plots the security market line

A company's stock plots below the security market line. This means the company is ______

  Was the sale commercially responsible?

Disposition of collateral. PRA Aviation, LLC, borrowed $3 million from Center Capital Corp. to buy a Gates Learjet 55B. Was the sale commercially responsible?

  Make arbitrage profits from these prices

Show two ways that you can make arbitrage profits from these prices.

  Earnings per share for next year assuming the firm raises

As the Financial vice president for Bear Enterprises, you have the following information: Expected net income after tax next year before new financing : $60,000,000. Sinking Fund payments due next year on existing debt: $20,000,000. Calculate Bear's ..

  What is the companys current actual beta

Select a major industrial or commercial company based in the United States and listed on one of the major stock exchanges in the United States. Each student should select a different company. What is the name of the company? What is the industry sect..

  Copyright for the shoelace design

Will her diary be useful in proving that she created the design? Decide whether or not Donita has patent or copyright for the shoelace design.

  Assume that interest rate parity holds

Assume that interest rate parity holds. U.S. interest rate is 13% and British interest rate is 10%. The forward rate on British pounds exhibits a ____ of ____ percent.

  Performing in the areas of profit-debt and asset turnover

Compare and contrast the two companies in terms of how well or how poorly they are performing in the areas of profit, debt, and asset turnover. Use appropriate ratios in your analysis. Indicate strategies for possible improvement in each area. the co..

  Fund diversification protect investors against defaults

To what extent does a fund's diversification protect investors against defaults? Explain your answer.

  Compute the beta and interpret it for prashant

Mr. Prashant Gupta is interested in investing in equity shares of Infosys and Hamdard. - Compute the Beta and interpret it for Prashant. Examine different circumstances with analysis of data.

  How large will their monthly payment be on new house

How large will their monthly payment be on the new house?

  What price will the bonds issue

Ultimate Butter Popcorn issues 3%, 7-year bonds with a face amount of $50,000. The market interest rate for bonds of similar risk and maturity is 2%. Interest is paid semiannually. At what price will the bonds issue?

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