How much is the zero-interest offer worth

Assignment Help Financial Management
Reference no: EM131825475

Toyota has announced that it will offer free financing for 36-month loans on selected new models. How much is the zero-interest offer worth to you on a 36-month $25,000 loan if the market rate on loans of this type is 8%?

If you had the option of receiving a $2,500 instant rebate instead of the zero-interest loan, would you take the rebate?

Next month, when the promotion is 1.99% APR (instead of free financing) for 36-month loans, would you prefer a $2,500 instant rebate or the low rate financing? Could you Please Provide Detailed Answer as I really need to know in full how its done. 

Reference no: EM131825475

Questions Cloud

What is the duration of each of the three bonds : An insurance company is analyzing the following three bonds, What is the duration of each of the three bonds?
Charge expressed as percentage of the loan received : What is your two-week interest charge expressed as a percentage of the loan received?
What break-even resale price in three years : What break-even resale price in three years would make you indifferent between buying and leasing?
Calculate the realized rate of return earned on this bond : which you reinvested in the bond. Calculate the realized rate of return earned on this bond.
How much is the zero-interest offer worth : How much is the zero-interest offer worth to you on a 36-month $25,000 loan if the market rate on loans of this type is 8%?
Create an arbitrage portfolio that pays exactly : Create an arbitrage portfolio that pays exactly $15 in 2 years and costs nothing today.
What is the fair present value of limited brands stock : What is the fair present value of Limited Brands’s stock if the required rate of return is 14.7 percent?
Mortgage to finance the purchase of large tract of land : You have just arranged for a $450,000 mortgage to finance the purchase of a large tract of land.
What is the equivalent uniform annual cost : What is the Equivalent Uniform Annual Cost ( EUAC ) of operating the existing machine for the next eight years at 12 % per annum?

Reviews

Write a Review

Financial Management Questions & Answers

  Evaluate their various price sensitivities

A $20 Million 8-year bond pays 6.25% coupon with a 6% yield. Use the model to construct a 70% synthetic floater and 30% inverse-floater. The required synthetic has a 4% basis + 2% spread. Summarize your results including prices, price durations and c..

  The expected value of return for plan

Under good conditions (25% probability), Financing Plan A will produce $30,000 higher return than Plan B. Under normal conditions (65% probability), Plan A will produce $10,000 higher return than Plan B, and under tight money conditions (10% probabil..

  What is the companys expected rate of return

The Fun Company's stock has a 50% chance of producing a 23% return, a 30% chance of producing a 20% return and 20% chance of producing a -29% return. What is the company's expected rate of return?

  What is the present value of this commitment

When Marilyn Monroe died, ex-husband Joe DiMaggio vowed to place fresh flowers on her grave every Sunday as long as he lived. The week after she died in 1962, a bunch of fresh flowers that the former baseball player thought appropriate for the star c..

  Through debt vs equity-cash flow statement

If you need 750,000 to start a venture, reasoning between financing the 750,000 through debt vs equity.

  Securities-which portfolio has the lowest risk

Suppose there are three securities (A, B, and C) to choose from to create your portfolio. Next year the economy will be in an expansion, normal, or recession state with probabilities 0.40, 0.33, and 0.27, respectively. where the numbers inside parent..

  What is meant by a managed liability

For commercial banks, what is meant by a managed liability? What role do liquid assets play on the balance sheet of commercial banks? What role do money market instruments play in the asset and liability management of large global banks?

  Considering two insurance settlement offers

You are considering two insurance settlement offers. The first offer includes annual payments of $5,000, $7,500, and $10,000 over the next three years, respectively. The other offer is the payment of one lump sum amount today. You are trying to decid..

  Option pricing model to price the call option

The current stock price of a company is $68 and the stock is expected to have a dividend yield 3% per year. The instantaneous risk free rate of return is 3.5%. The instantaneous standard deviation of its stock is 35%. Using the Black-Scholes Option P..

  Is fsb positioned to profit or lose

Suppose that management has misstated the rate sensitivity of the bank's money market deposit accounts because the bank has not changed the rate it pays on these liabilities for six months and doesn't plan to change them in the near future. Will the ..

  What is the amount if you pay for washing machine today

The local home improvement store has a washing machine on sale for $601, with the payment due in 2 years from today. The store is willing to discount the price at an annual rate of 9 percent (compounded annually) if you pay today. What is the amount ..

  Bid for each share of vandell common stock in an acquisition

Indicate the range of possible prices that Hastings could bid for each share of Vandell common stock in an acquisition.

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