Question
Present value with periodic rates . SamHinds, a localdentist, is going to remodel the dental reception area and add two new workstations. He has contactedA-Dec,
Present value with periodic rates.SamHinds, a localdentist, is going to remodel the dental reception area and add two new workstations. He has contactedA-Dec, and the new equipment and cabinetry will cost $22,000. The purchase will be financed with an interest rate of 8.5% loan over 7 years. What will Sam have to pay for this equipment if the loan calls for semiannual payments (2 peryear) and weekly payments (52 peryear)? Compare the annual cash outflows of the two payments. Why does the weekly payment plan have less total cash outflow eachyear?
What will Sam have to pay for this equipment if the loan calls for semiannual payments (2 peryear)? (Round to the nearestcent.)
What will Sam have to pay for this equipment if the loan calls for weekly payments (52 peryear)? (Round to the nearestcent.)
Why does the weekly payment plan have less total cash outflow eachyear?(Select the bestresponse.)
A. As more payments are made eachyear, the principal is repaid quickly and thus the interest expense is lower.
B. As more payments are made eachyear, the APR becomes smaller and thus the interest expense is lower.
C. As more payments are made eachyear, the EAR becomes smaller and thus the interest expense is lower.
D. As more payments are made eachyear, the years of the loan are reduced and thus the interest expense is lower.
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