Value of this business today if his forecasts are accurate

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Reference no: EM131825278

1) A young graduate is planning on saving $645.00 each quarter for four years in an investment account paying 13.00% interest that is compounded quarterly. His first deposit will be made at the end of the next quarter, so this is a regular annuity. In 4 years, he also plans on being able to afford a 60-month car loan with $372.00 monthly payments at a 11.16% APR interest rate. Given the graduate’s plans, how expensive of a “dream car” will he expect to be able to purchase in four years?

2) An entrepreneur invests $51,323.00 into a start-up business today. He expects the business will generate $61,497.00 per year for 15.00 years, and then it will generate $139,660.00 per year for the following 15.00 years. Suppose he wants a 7.00% annual return to run the business.

What is the value of this business today if his forecasts are accurate? (HINT: Discount all cash flows to today and subtract start-up investment.)

3) George Costanza has just taken out an $18,313.00, 60-month car loan from his local bank with a 7.08% interest rate compounded monthly. At the end of the second year, George plans on making a $2,903.00 payment directly to the loan’s principal and then to keep on making his regular monthly payments.

What is the monthly payment for this car loan?

4) George Costanza has just taken out an $18,313.00, 60-month car loan from his local bank with a 7.08% interest rate compounded monthly. At the end of the second year, George plans on making a $2,903.00 payment directly to the loan’s principal and then to keep on making his regular monthly payments.

What is the balance remaining to pay on the loan after two years?

5) George Costanza has just taken out an $18,313.00, 60-month car loan from his local bank with a 7.08% interest rate compounded monthly. At the end of the second year, George plans on making a $2,903.00 payment directly to the loan’s principal and then to keep on making his regular monthly payments.

What is the balance remaining on the loan after the extra payment to principal is made? (This happens after year 2...)

Reference no: EM131825278

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