anthonywdjr5211
11.03.2020 •
Business
They decide to shop for furnishings for the new house. They choose items that amount to $1,600.00. The store has 2 simple interest options for purchasing: Option 1: 20% down payment and financing at 6.4% simple interest per year for 2 years. Option 2: no down payment and financing at 6.5% simple interest for 3 years. Answer each of the following questions separately, showing all your work to reach each answer. A. Which option will result in smaller total finance charge? B. Which option will result in the smaller monthly payment? C. If they decide to defer any purchases and take a $1,600 bonus that Maria will be getting from work and invest it at 2.5% per year simple interest, how long will it need to be invested to earn $250 interest D. If they decide to defer any purchases and invest the $1600.00 bonus at 1.5% interest compounded every month, how much interest will they earn in 3 years?
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Ответ:
Faulk: -0,1925629 = -19.25%
Yoo: 0,1615398 = 16.15%
Explanation:
We need to solve forthe present value of the coupon and maturity on each bond considering the yield to maturity of 7% and 9% and compare the price variations:
C20.000
time34
rate0.035
PV$394.0137
Maturity 1,000.00
time 34.00
rate 0.035
PV 310.48
PV c$394.0137
PV m $310.4761
Total$704.4897
C20.000
time34
rate0.045
PV$344.9352
Maturity 1,000.00
time 34.00
rate 0.045
PV 223.90
PV c$344.9352
PV m $223.8959
Total$568.8311
Price variation on Faulk
($568.8311 - $704.4897) / $704.4897 = -0,1925629
Yoo Company:
C50.000
time34
rate0.035
PV$985.0342
Maturity 1,000.00
time 34.00
rate 0.035
PV 310.48
PV c$985.0342
PV m $310.4761
Total$1,295.5103
C50.000
time34
rate0.045
PV$862.3379
Maturity 1,000.00
time 34.00
rate 0.045
PV 223.90
PV c$862.3379
PV m $223.8959
Total$1,086.2338
($1,295.5103 - $1,086.2338 ) / $1,295.5103 = 0,1615398