### Find the equivalent monthly cost over the life of the car

Assignment Help Finance Basics
##### Reference no: EM13943430

Your client needs a new car and is trying to decide whether to (1) buy and pay cash, (2) buy fully financed, or (3) lease. The following terms are available:
If the car is purchased for cash:
Cost new, \$24,000
Factory rebate available immediately, \$2,000
If car is purchased fully financed:
Cost new, \$24,000
No down payment
100 percent financing by dealer at in = 6 percent, 36 monthly paymentsIf the same car is leased:
Monthly lease fee paid in advance at BOM (beginning of the month), \$450 per month (the first payment is due now).
At the end of the 60-month lease period the client has an option to purchase the car for \$1.00.
The client ordinarily invests and borrows at in = 12 percent compounded monthly, and expects to keep the car for 60 months.

a) Find the equivalent monthly cost over the life of the car of each of the three alternatives and select the lowest cost. (Disregard resale value at EOM 60, since it is the same in all three cases)

b) The dealer offers an additional bonus feature with the fully financed purchase offer where by the first payment is not due until EOM 4. Delivery of the car is made now, and interest at 6 percent accrues on the balance owed. The 36 monthly payments are calculated on the amount owed at EOM 3. Find the equivalent monthly cost over the life of the car of acquiring the car under this alternative.

#### Incurred losses and loss-adjustment expenses

A large casualty insurer writes a substantial amount of private passenger auto insurance. An actuary analyzed claims data for a specific class of drivers for a recent one-ye

#### Calculate u, d, and p for a two-step tree

Consider a European call option on a non-dividend-paying stock where the stock price is \$40, the strike price is \$40, the risk-free rate is 4% per annum, the volatility is 3

#### Calculate the cost of equity using the dividend growth

A stock's last dividend was \$0.80 and dividends grow at 5%; the stock's price is \$61. In addition, the stock's beta is 1.50, the risk free rate is 5.5%, and the return on th

#### What are the total current assets

Accounts Payable is \$5,173, Short-Term Debt is \$288, Inventories are \$1,816, Other Current Liabilities are \$1,401, and Other Current Assets are \$707. What are the Total Curr

#### What will the price be in five years and in fourteen years

Anton, Inc., just paid a dividend of \$2.85 per share on its stock. The dividends are expected to grow at a constant rate of 4.5 percent per year, indefinitely. Assume invest

#### What is the additional investment in net working capital

A project for Jevon and Aaron, Inc. results in additional accounts receivable of \$400,000, additional inventory of \$180,000, and additional accounts payable of \$70,000. What

#### Should speculators use currency futures or options

Should Speculators Use Currency Futures or Options? Point Speculators should use currency futures because they can avoid a substantial premium. To the extent that they are wil

#### Prepare a three year financial model

Please prepare a three year financial model that you will present to the management team. The analysis needs to demonstrate what level of incremental revenue is needed ove

### Write a Review

#### 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!