Adam has just graduated, and has a good job at a decent starting salary. He hopes to purchase his first new car. The car that Adam is considering costs $50,000. The dealer has given him three payment options:

1. Zero percent financing. Make a $5,000 down payment from his savings and finance the remainder with a 0% APR loan for 72 months. Adam has more than enough cash for the down payment, thanks to generous graduation gifts.

2. Rebate with no money down. Receive a $4,000 rebate from the car dealer and finance the rest with a standard 72-month loan, with an 4.00% APR. He likes this option, as he could think of many other uses for the $5,000 of his saving.

3. Pay cash. Get the $4,000 rebate and pay the rest with cash. While Adam doesnt have balance of the car cost in hand, he wants to evaluate this option. His parents always paid cash when they bought a family car; Adam wonders if this really was a good idea.

Adams fellow graduate, Jenna, has been trying to decide how much of her new salary she could save for retirement. Jenna is considering putting $5,200 of her annual savings in a stock fund. She just turned 22 and has a long way to go until retirement at age 62, and she considers this risk level reasonable. The fund she is looking at has earned an average of 7.00% over the past 15 years and could be expected to continue earning this amount, on average. While she has no current retirement savings, five years ago Jennas grandparents gave her a new 30-year U.S. Treasury bond with a $19,500 face value with 2.25% semiannual coupons.

Jenna wants to know her retirement income if she both (1) sells her Treasury bond at its current market value and invests the proceeds in the stock fund and (2) saves an additional $5,200 at the end of each year in the stock fund from now until she retires. Once she retires, Jenna wants those savings to last until she is 95.

Adam's car purchase NOTE: Use this information to solve the data case in addition to other necessary information contained in text Car cost Loan Term in months Option 1 Down Payment Option 2 and 3 Rebate Option 2 Loan rate Deposit Interest Rates Student Loan Rate Credit Card Interest Rate Question 1 (12 pts): Down Payment Amount Financed Interest Rate (APR) Loan Term (months) Monthly Payment Option 1- Zero percent financing Option 2 - Rebate w/ $0 down Option 3 - Pay cash MONTHLY CASH FLOWS: Cash flows for Month 1 to End of Term Cash flow for Month O Option 1- Zero percent financing Option 2 - Rebate w/ $o down Option 3 - Pay cash Down Payment APR PV of Car Financing at Deposit APR Question 2 (12 pts): Which option should he select? Option 1 Option 2 Option 3 Down Payment APR Question 3 (12 pts): PV of Car Financing at Student Loan APR Which option should he select? Option 1 Option 2 Option 3 Down Payment APR PV of Car Financing at Credit Card APR Question 4 (12 pts): Which option should he select? Option 1 Option 2 Option 3 Jenna's retirement income if she sells her T-bonds with face value identified below and invests the proceeds in the stock market at a return identified below and saves an additional amount identified below at the end of each year in a stock fund until retirement. Jenna wants those retirement savings to last to the age specified in the data table below. Use this information to solve the data case in addition to other information in the tex -Bond Face Value Coupon Rate Remaining Term on T-Bond in years Current YM Jenna's current age Desired retirement age Planned life expectancy ( age in years) Annual Investment in stock fund Annual Return on Stock Fund Jenna's expected annual salary increases for Q7 Inflation Rate for Q7 Current Coca-Cola Stock Price for Q9 Coca-Cola Annual Dividend (just paid) Cocal-Cola Expected Dividend Growth Question 5 (12 p What is the value today of the Treasury Bond? T-Bond Face Value Coupon Rate Semiannual Pmt Remaining Term (years) Current YTM PV Question 6 (12 Initial Investment - Treasury Bond PV Annual investment in stock fund Number of years Jenna saves money (years) Number of years of withdrawal (years) Return on stock fund (r. 2) Step 1: FV of saving from age 22 until retirement Step 2: Annual withdrawal amount beginning age 63 Hint: Step 1: Find how much money will Jenna save by the time she retires. Step 2: Once you know how much Jenna saves by retirement, this will become Jenna's PV at that age. Find payment (withdrawal) Jenna gets each year in retirement Question 7 (12 p Step 1: Find Cash flow for Jenna from now until retirement Time Period 20 24 29 361 401 Cash Flow Return on stock fund (r. 2) Inflation rate (g) Step 2: Find FV at Retirement Step 3. Jenna's first retirement withdrawal Step 4 Value of first retirment withdrawal in today's $ Should Jenna sell her Treasury bond and invest the proceeds in the stock tund? Give at Question 8 (4 pt least one reason for and against this plan? Question 9 (12 p Coca-Cola stock Current Price Annual Dividend Dividend Growth Expected Dividend in one year