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Carla Vista Tooling Ltd. is assessing two available options for the purchase of new equipment with a negotiated cash price of $170,000. The manufacturer is
Carla Vista Tooling Ltd. is assessing two available options for the purchase of new equipment with a negotiated cash price of $170,000. The manufacturer is willing to accept a down payment of 20% of the purchase price and an instalment note for the balance. The note would require quarterly fixed principal payments (plus interest) starting October 1, 2020, for a period of two years. Carla Vista has a proposal from its bank for an instalment loan for two years that requires a fixed blended monthly payment (including both principal and interest) starting August 1, 2020. The loan would be for 80% of the equipment's purchase price. The current market rate of interest is 8%. Both contracts have an interest rate of 8%. Your answer is correct. Is there any measurement uncertainty in determining which option is best for Carla Vista? No V Which discounted cash flow approach should be used in the comparison of the two alternatives? Traditional Discounted Cash Flow Approach V e Textbook and Media X Your answer is incorrect. Calculate the amount of the payments required of Carla Vista under each alternative. (Round answers to 2 decimal places, e.g. 5,275.25.) Quarterly fixed principal + interest payments option with manufacturer: Total amount of payments $ Fixed blended monthly instalment note with the bank including principal and interest: Total amount of payments $ e Textbook and Media Carla Vista Tooling Ltd. is assessing two available options for the purchase of new equipment with a negotiated cash price of $170,000. The manufacturer is willing to accept a down payment of 20% of the purchase price and an instalment note for the balance. The note would require quarterly fixed principal payments (plus interest) starting October 1, 2020, for a period of two years. Carla Vista has a proposal from its bank for an instalment loan for two years that requires a fixed blended monthly payment (including both principal and interest) starting August 1, 2020. The loan would be for 80% of the equipment's purchase price. The current market rate of interest is 8%. Both contracts have an interest rate of 8%. Your answer is correct. Is there any measurement uncertainty in determining which option is best for Carla Vista? No V Which discounted cash flow approach should be used in the comparison of the two alternatives? Traditional Discounted Cash Flow Approach V e Textbook and Media X Your answer is incorrect. Calculate the amount of the payments required of Carla Vista under each alternative. (Round answers to 2 decimal places, e.g. 5,275.25.) Quarterly fixed principal + interest payments option with manufacturer: Total amount of payments $ Fixed blended monthly instalment note with the bank including principal and interest: Total amount of payments $ e Textbook and Media
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