Present value with periodic rates. ??Sam? Hinds, a local? dentist, is going to remodel the dental reception area...

80.2K

Verified Solution

Question

Finance

*Present value with periodicrates***.
??Sam? Hinds, a local? dentist, is going to remodel the dentalreception area and add two new workstations. He has contacted?A-Dec, and the new equipment and cabinetry will cost $24,000. Thepurchase will be financed with an interest rate of 9?% loan over 8years. What will Sam have to pay for this equipment if the loancalls for semiannual payments (2 per? year) and monthly payments(12 per? year)? Compare the annual cash outflows of the twopayments. Why does the monthly payment plan have less total cashoutflow each? year?
-What will Sam have to pay for this equipment if the loan callsfor semiannual payments (2 per? year)?
-What will Sam have to pay for this equipment if the loan callsfor monthly payments (12 per? year)?
-Why does the monthly payment plan have less total cash outfloweach? year?
A. As more payments are made each? year, the years of the loanare reduced and thus the interest expense is lower.
B. As more payments are made each? year, the EAR becomes smallerand thus the interest expense is lower.
C. As more payments are made each? year, the APR becomes smallerand thus the interest expense is lower.
D. As more payments are made each? year, the principal is repaidquickly and thus the interest expense is lower.

Answer & Explanation Solved by verified expert

3.6 Ratings (596 Votes)

SEE THE See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Present value with periodicrates.??Sam? Hinds, a local? dentist, is going to remodel the dentalreception area and add two new workstations. He has contacted?A-Dec, and the new equipment and cabinetry will cost $24,000. Thepurchase will be financed with an interest rate of 9?% loan over 8years. What will Sam have to pay for this equipment if the loancalls for semiannual payments (2 per? year) and monthly payments(12 per? year)? Compare the annual cash outflows of the twopayments. Why does the monthly payment plan have less total cashoutflow each? year?-What will Sam have to pay for this equipment if the loan callsfor semiannual payments (2 per? year)?-What will Sam have to pay for this equipment if the loan callsfor monthly payments (12 per? year)?-Why does the monthly payment plan have less total cash outfloweach? year?A. As more payments are made each? year, the years of the loanare reduced and thus the interest expense is lower.B. As more payments are made each? year, the EAR becomes smallerand thus the interest expense is lower.C. As more payments are made each? year, the APR becomes smallerand thus the interest expense is lower.D. As more payments are made each? year, the principal is repaidquickly and thus the interest expense is lower.