Which alternative is better deal

Assignment Help Financial Management
Reference no: EM13728405

Suppose you are going to buy a car. The cost of car is $24,000. You have $10,000 for down payment. You can borrow the balance of $14,000 from dealership’s finance company at 3% APR, with monthly payment for 36 months or you can borrow from a bank with 8% APR monthly payment for 3 years, and receive a $2,500 rebate on the purchase price. Assume that if you take the rebate, you will apply it toward the purchase. Which alternative is better deal?

Reference no: EM13728405

Questions Cloud

Discuss the history of this issue : Describe the ethical issue involved and discuss the history of this issue, including any pertinent policies or precedents. Discuss the major stakeholders involved in the issue and their respective roles.
Evaluate the current business model : 2.For your chosen organization, evaluate the current business model.• What business model does your chosen organization use?• Does it work for this organization? Is there a better model that should be used?3.Analyze the business models found in this ..
Material which can endures vibrations : Material which can endures vibrations and saline conditions
Explore manufacturing facilitie to start producing vehicle : They have decided to apply for a patent for this technology and explore manufacturing facilities to start mass producing the vehicle.
Which alternative is better deal : Suppose you are going to buy a car. The cost of car is $24,000. You have $10,000 for down payment. You can borrow the balance of $14,000 from dealership’s finance company at 3% APR, with monthly payment for 36 months or you can borrow from a bank wit..
Hobbit manufacturing-increase in total market value for firm : Operating income (EBIT) $600 million, Interest expense $0, Tax rate 35%, Debt $0, Cost of equity 7%, WACC 7%. The company has no growth opportunities (g = 0), so the company pays out all of its earnings as dividends. Hobbit can borrow money at a pre-..
External factors affect the four functions of management : Explain how internal and external factors affect the four functions of management. Explain how the following internal and external factors affect the four functions of management, and includes specific examples for each:
Presentation for board of directors about organization : Imagine you are an executive for BP, JP Morgan or, GoldMan Sacs, and you are preparing a presentation for the board of directors about the organization's direction.
What is present value of the girls fortune : A 5 year girl was given a lottery ticket for her recent birthday. The ticket was the grand prize winner and is suppose to pay $80,000 per year after taxes, for 20 years. The state sued, however, and won the case arguing that it would pay the prize as..

Reviews

Write a Review

Financial Management Questions & Answers

  Increases unsystematic risk and yield to maturity on a bond

Increases unsystematic risk, The yield to maturity on a bond is

  Determine the present value of the cash flow stream

Consider a lottery that pays to the winner an annuity of $950 that begins at the end of the first year and continues at the end of each consecutive year for a total of 9 years with one exception. Because of high administrative costs associated with r..

  calculation of the debt component of LilyMacs WACC

Suppose that Lily Mac Photography expects EBIT to be approximately $200,000 per year for the foreseeable future, and that it has 1,000 10-years, 9 percent annual coupon bonds outstanding. What would the appropriate tax rate be for use in the calculat..

  Variable costing income statement and absorption statement

For month ended 6/30/X1, there were 1,531 of direct labor hours incurred - Explain how would I begin creating a variable costing income statement and absorption statement?

  Calculate the value of fraziers stock

Frazier Manufacturing paid a dividend last year of $2, which is expected to grow at a constant rate of 5%. Frazier has a beta of 1.3. If the market is returning 11% and the risk-free rate is 4%, calculate the value of Frazier's stock.

  Digital organics has the opportunity to invest

Digital Organics (DO) has the opportunity to invest $0.98 million now (t = 0) and expects after-tax returns of $580,000 in t = 1 and $680,000 in t = 2. The project will last for two years only. The appropriate cost of capital is 14% with all-equity f..

  Bond valuation-what is the bonds current market price

Callaghan Motors' bonds have 5 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 11.5%, and the yield to maturity is 11%. What is the bond's current market price? Round your answer to th..

  What is retained earnings balance at the end of the year

Abc company had beginning retained earnings of $1.198. During the year, the company reported sales of $21, 449, costs of $6,696, depreciation of $1.744, dividends of $737, and interest paid of $2, 118. The tax rate is 15%. What is the retained earnin..

  Calculate the NPV-PI and IRR

(NPV, PI, and IRR calculations) Fijisawa Inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay would be $1,800,000, and the project would generate in..

  Calculate the price of a constant-maturity

Using a graph, comment on how well the market predicted the future moves of the spot 6-month rate on both dates and in general, are forward rates a good predictor of future interest rates?

  Calculate the equivalent annual operating cost of machine

The operating cost of a new machine is $500 for the first year. Starting the second year, the operating cost increases by $200 per year for the next 10 years. Calculate the equivalent annual operating cost of the machine. What will be the present and..

  Transactions in a mutual fund

Abe made the following transactions in a mutual fund: The fund paid a dividend of $2 per share

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