Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

6. (a) You have just started a new company to deliver mail and parcels to rural communities. At the moment, other companies either do not

6.

(a)

You have just started a new company to deliver mail and parcels to rural communities. At the moment, other companies either do not provide a service or are exceptionally expensive. The new company requires initial investment to purchase a fleet of 20 medium-size vans. These cost 20,000 each and each one requires a down payment of 20 per cent. Your business plan anticipates the vans being fully paid off after 6 years and you wish to make monthly payments on the vans starting a month from now. The APR of the loan is 9.6 per cent. What are the monthly payments?

(b)

After 4 years, you are approached by another firm who wishes to buy the postal company. You wish to pay off the van loan completely and approach your bank for details. They have indicated that any early completion of your loan will incur a 1 per cent penalty bringing the interest rate to 10.6 percent. You have just paid an instalment and have 24 payments left (next payment in a month). How much will you need to pay the bank today to cancel the loan?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Legal Aspects Of Trade Finance

Authors: Charles Chatterjee

1st Edition

1857433890, 978-1857433890

More Books

Students also viewed these Finance questions

Question

Explain five .reasons why incentive plans fail.

Answered: 1 week ago

Question

friendliness and sincerity;

Answered: 1 week ago