User Account

All Pages

What is the pv of the financing option

Assignment Help Finance Basics
Reference no: EM132719497

Tony and Savannah would like you to help them address some of their financial goals. They would like to know if Savannah should lease or buy (finance) her next car (2021 Toyota Rav 4). They try to change their car every 4 years. Assume 2% inflation.

Additional Information:

Finance Option:

MSRP: $26,000
Interest Rate: 4 %
Down payment required: 20%
Residual Value: Please use $20, 741 for the estimated Blue Book Residual Value for 2021 Rav 4 model.

Lease Option:

Monthly Lease payment: $199

Due at leasing: $2,999

1. How much do they have to pay monthly if they choose to finance?

2. What is the PV of the financing option? (Please show your calculation on excel)

3. What is the PV of the lease option? (Please show your calculation on excel)

4. Which option would you recommend based on your calculation? Why?

Problem #2:

You are considering purchasing a 2021 LX 570 for $86,580. The Lexus dealer is offering 2 options on the purchase:

Option 1. Receive a $6,500 rebate on the price of the car and finance the balance over 5 years at 4% interest.

Option 2. Finance the vehicle for 60 months at 0% interest.

5. What is the monthly payment for Option 1?

6. What is the total cost of Option 1?

7. What is the monthly payment for Option 2?

8. Which option would you recommend based on total cost of the car? What other factors should you consider?

Reference no: EM132719497

Questions Cloud

Discuss the importance of financial stewardship : Discuss the importance of financial stewardship and its effect on your retirement
Compute the current ratio for year 2 and year 1 : Dividends of $16,000 were declared and paid in year 2. Compute the current ratio for year 2 and year 1. (Round your answers to 1 decimal place.)
Determine the times interest earned : A company reports the following: Income before income tax expense $9,100,000. Determine the times interest earned. Round to one decimal place
How to calculate the effect of the lifo on the income : Calculate the effect of the LIFO on the income. During 2018, 50,000 units were purchased for $8.50 each. Sales for the year totaled 54,000 units leaving 6,000
What is the pv of the financing option : 1. How much do they h ave to pay monthly if they choose to finance? 2. What is the PV of the financing option? (Please show your calculation on excel)
Perform ratio analysis on your company using the ratios : Perform ratio analysis on your company using the ratios listed in Exhibit 13.16 on page 505 of your text (these must be in an Excel spreadsheet).
Determine the company ratio of fixed assets to long-term : Total stockholders' equity 320,000. Determine the company ratio of fixed assets to long-term liabilities and Round to one decimal place
Executive compensation : The market trend towards escalating executive compensation reflects the critical importance of an executive to an organization's long-term viability.
Investments affect the variance of portfolio return : How will the volatilities and correlations of the component investments affect the variance of the portfolio return?

Reviews

Write a Review

Finance Basics Questions & Answers

  How many shares are issued

The authorized share capital of the Alfred Cake Company is 100,000 shares. The equity is currently shown in the company's books as follows:

  Discuss whether you would recommend registering

Discuss whether you would recommend registering these securities with the Securities and Exchange Commission. Some securities are exempt from the SEC registration requirement. Is it likely that VirtualStream's stock would qualify for such an exemptio..

  What is the value of this annuity today of the discount rate

The payments are paid on the first day of each year. What is the value of this annuity today of the discount rate is 8.5 percent? 3. (Do it on Financial Calculator) Global comunications has a 7 percent, semiannual coupon bond outstanding with..

  Current price of the bonds-lerner and luckmann co

Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 14 years to maturity?

  How does net working capital affect the npv

How does net working capital affect the NPV of a 8-year project if working capital is expected to increase by $14,000 and the project

  What is the effective annual rate on the loan

Suppose Community Bank offers to lend you $10,000 for one year at a nominal annual rate of 8.00%, but you must make interest payments

  How long at second bank

How long will it take your initial $85,000 investment to reach the desired level at First Bank, which pays simple interest? How long at Second Bank

  Non-constant growth

Staggert Ltd will pay dividends of $5.00, $6.25, $4.75, and $3.00 for the next four years. Thereafter, the company expects its growth rate to be at a constant.

  What is the per-share value of vandell

What is the per-share value of Vandell to Hastings Corporation? Assume Vandell now has $10.82 million in debt.

  Test with regards to recession equation

What is the purpose of an f test with regards to recession equation?

  What are the irrs of the given opportunity

What are the IRRs of this opportunity? (Hint: Build an Excel model which tests the NPV at 1% intervals from 1% to 40%. Then zero in on the rates at which).

  The projects cost and expected annual cash flows are same

evans industries is considering a new product that would require an investment of 25 million at t 0.nbsp if the new

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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