95 l-1 Module 8 Homework Problem 1 Colton wants to sell you a Bubble Guppie $89,000! He annual payments which start in one year and include interest at 5%. tells you that you can pay in three equal on sale for $79,000. If you bought the item for $79,000, you woul You have seen the same item have to borrow the money from the bank at 8%, which is the better deal? Problem 2 Ryan will sell you a Thing for $30,000. No money down and only 1% interest per year for two years. (You s end him the 1% at the end of each year). At the end of the 2nd year, you send him the 30,000 along with the interest. If you borrowed from the bank you would have to pay 6%-a heck of a deal... or is it? (How much are you really paying for the Thing?) Problem 3 What if the original Sally note (around page 59) had called for seven equal payments including interest at 12% and now has four more years left to run. How much would you be willing to pay Sally if you wanted to earn A) B) 8%? 14%? Amortize it. Amortize it. Problem 4 Doozer wants to sell you a note with a face value of $1,000,000. The face rate on the note is 10% and is payable in 4 equal payments which include interest at 10%. The note has four years left to run and is seasoned. A. How much would you pay for the note to earn 12%? Amortize it. B. How much would you pay for the note to earn 8%? Amortize it Problem 5 You want to buy a motorcycle from JD. The cost is $20,000, $2,000 down and the rest in three equal annual payment beginning one year from today. Interest is included in the payments at 10%. How much are the payments? Amortize the loan 95 l-1 Module 8 Homework Problem 1 Colton wants to sell you a Bubble Guppie $89,000! He annual payments which start in one year and include interest at 5%. tells you that you can pay in three equal on sale for $79,000. If you bought the item for $79,000, you woul You have seen the same item have to borrow the money from the bank at 8%, which is the better deal? Problem 2 Ryan will sell you a Thing for $30,000. No money down and only 1% interest per year for two years. (You s end him the 1% at the end of each year). At the end of the 2nd year, you send him the 30,000 along with the interest. If you borrowed from the bank you would have to pay 6%-a heck of a deal... or is it? (How much are you really paying for the Thing?) Problem 3 What if the original Sally note (around page 59) had called for seven equal payments including interest at 12% and now has four more years left to run. How much would you be willing to pay Sally if you wanted to earn A) B) 8%? 14%? Amortize it. Amortize it. Problem 4 Doozer wants to sell you a note with a face value of $1,000,000. The face rate on the note is 10% and is payable in 4 equal payments which include interest at 10%. The note has four years left to run and is seasoned. A. How much would you pay for the note to earn 12%? Amortize it. B. How much would you pay for the note to earn 8%? Amortize it Problem 5 You want to buy a motorcycle from JD. The cost is $20,000, $2,000 down and the rest in three equal annual payment beginning one year from today. Interest is included in the payments at 10%. How much are the payments? Amortize the loan