You are buying a previously owned car today at a price of $9,470. You are paying...

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Finance

You are buying a previously owned car today at a price of$9,470. You are paying $800 down in cash and financing the balancefor 36 months at 7.8 percent, compounded monthly. What is yourmonthly payment amount?
A.
$332.95
B.
$239.46
C.
$258.02
D.
$270.89
Ghanata Oil has a well that will produce an annual cash flow of$236 million next year. The cash flow is expected to increase by3.5 percent per year indefinitely. What is the well worth today ifthe discount rate is 15 percent?
A.
$2,052 million
B.
$1,725 million
C.
$899 million
D.
$1,573 million
A 10-year loan in the amount of $527,000 is to be repaid inequal annual payments. What is the remaining principal balanceafter the sixth payment if the interest rate is 5 percent,compounded annually?
A.
$242,007
B.
$282,310
C.
$346,410
D.
$299,540
You are given that the present value of the cash flow shownbelow is $43,800. Determine the mission cash flow if the discountrate is 11 percent.
Year
Cash Flow
1
$10,800
2
$10,800
3
$10,800
4
?????
5
$15,000

Answer & Explanation Solved by verified expert

4.3 Ratings (566 Votes)

1. PV = 9470 - 800

FV = 0

rate = 7.8%/12

N = 36

use PMT function in Excel

monthly payments = 270.89

2. value of the well today = 236/(0.15 - 0.035) = 2052 million

3. N = 10, FV = 0, PV = 527000, rate = 5%

use PMT function in Excel

annual payments = 68,248.91

now replace n with 6, and calculate FV

value of loan after 6 years = 242,007

	11.0000%
Cash flows	Year	Discounted CF
(43,800.00)	0	-43800.00
10,800.00	1	9729.73
10,800.00	2	8765.52
10,800.00	3	7896.87
-	4	0.00
15,000.00	5	8901.77

PV of missing cash flow = 8506

the missing cash flow = 8506*1.11^4 = 12,912

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Transcribed Image Text

You are buying a previously owned car today at a price of$9,470. You are paying $800 down in cash and financing the balancefor 36 months at 7.8 percent, compounded monthly. What is yourmonthly payment amount?A.$332.95B.$239.46C.$258.02D.$270.89Ghanata Oil has a well that will produce an annual cash flow of$236 million next year. The cash flow is expected to increase by3.5 percent per year indefinitely. What is the well worth today ifthe discount rate is 15 percent?A.$2,052 millionB.$1,725 millionC.$899 millionD.$1,573 millionA 10-year loan in the amount of $527,000 is to be repaid inequal annual payments. What is the remaining principal balanceafter the sixth payment if the interest rate is 5 percent,compounded annually?A.$242,007B.$282,310C.$346,410D.$299,540You are given that the present value of the cash flow shownbelow is $43,800. Determine the mission cash flow if the discountrate is 11 percent.YearCash Flow1$10,8002$10,8003$10,8004?????5$15,000

	A.	$2,052 million
	B.	$1,725 million
	C.	$899 million
	D.	$1,573 million