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You need a new car and the dealer has offered you a price of $20,000, with the following payment options: (a) pay cash and receive a $2,000 rebate, or (b) pay a $5,000 down payment and finance the rest with a 0% APR loan over 30 months. But having just quit your job and started an MBA program, you are in debt and you expect to be in debt for at least the next 221 years. You plan to use credit cards to pay your expenses; luckily you have one with a low (fixed) rate of 15.16% APR (monthly). Which payment option is best for you? Your monthly discount rate is \%. (Round to four decimal places.) For you, the present value of option (b) is $ (Round to the nearest dollar.) Which is the correct decision and why? (Select the best choice below.) A. "Accept option (a) because it is less expensive than option (b). B. Accept option (a) because it is more expensive than option (b). C. Accept option (b) because it is more expensive than option (a). D. Accept option (b) because it is less expensive than option (a). Which do you prefer: a bank account that pays 9% per year (EAR) for three years or a. An ocoount that pays 4.5% every six months for three years? b. An account that pays 13.5% every 18 months for three years? c. An account that pays 0.9% per month for three years? a. An account that pays 4.5% every six months for three years? If you deposit $1 into a bank account that pays 9% per year for three years, you will have $ (Round to five decimal places.) If you deposit $1 into a bank account that pays 4.5% every six months for three years, the amount you will receive after three years is $ (Round to five decimal places.) Therefore, you will prefer: (Solect from the drop-down menu.) b. An account that pays 13.5% every 18 months for three years? If the account pays 13.5% every 18 months for three yoars, the amount you will receive after three years is $ (Round to five decimal ptaces.) Therefore, you will profer: (Select from the drop-down menu.) c. An account that pays 0.9% perfmonth for three years? If the account pays 0.9% every month for three years, the amount you will receive after three years is 5 (Round to five decimal places.) Therefore, you will prefer: (Seloct trom the drop-down menu.) Consider a project that requires an initial investment of $96,000 and will produce a single cash flow of $146,000 in 5 years. a. What is the NPV of this project if the 5 -year interest rate is 4.9% (EAR)? b. What is the NPV of this project if the 5 -year interest rate is 9.9% (EAR)? c. What is the highest 5 -year interest rate such that this project is still profitable? a. What is the NPV of this project if the 5 -year interest rate is 4.9% (EAR)? The NPV in this case (EAR =4.9% ) is $. (Round to the nearest cent.) b. What is the NPV of this project if the 5-year interest rate is 9.9% (EAR)? The NPV in this case (EAR =9.9% ) is \$ (Round to the nearest cent.) c. What is the highest 5-year interest rate such that this project is still profitable? The highest EAR such that this project is still profitable is \%. (Round to two decimal places.) You need a new car and the dealer has offered you a price of $20,000, with the following payment options: (a) pay cash and receive a $2,000 rebate, or (b) pay a $5,000 down payment and finance the rest with a 0% APR loan over 30 months. But having just quit your job and started an MBA program, you are in debt and you expect to be in debt for at least the next 221 years. You plan to use credit cards to pay your expenses; luckily you have one with a low (fixed) rate of 15.16% APR (monthly). Which payment option is best for you? Your monthly discount rate is \%. (Round to four decimal places.) For you, the present value of option (b) is $ (Round to the nearest dollar.) Which is the correct decision and why? (Select the best choice below.) A. "Accept option (a) because it is less expensive than option (b). B. Accept option (a) because it is more expensive than option (b). C. Accept option (b) because it is more expensive than option (a). D. Accept option (b) because it is less expensive than option (a)

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