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Question 7: Assume you have the option to buy the BMW for $26,995 at the end of the lease (pay all lease payments then $26.995
Question 7: Assume you have the option to buy the BMW for $26,995 at the end of the lease (pay all lease payments then $26.995 in 36 months to own it). Is it a better deal for you to lease the car and then purchase it in 3 years or to purchase it today for $37,000 cash? Still assume an interest rate of 4.8% annually. EAR & APR Question 8: You own Huntington Beach Boats, and just received a purchase for a $1.5 million yacht. Unfortunately, you have no money in your business account and need to borrow to build the boat! It will cost you $800,000 to build and you will be able to pay back the money in a year. Three banks you have visited are willing to give you the money with the boat as collateral if the buyer does not pay. CSUSB Credit Union is offering you an $800,000 loan at 12% simple interest Huntington Beach Bank has offered you an $800,0000 loan at 11.8% compounded monthly. Finally, Bank of Laguna has offered you an 11% loan compounded continuously, for the same amount. Whose loan should you go with and what is the EAR of this loan? What is the APR of each loan? Question 7: Assume you have the option to buy the BMW for $26,995 at the end of the lease (pay all lease payments then $26.995 in 36 months to own it). Is it a better deal for you to lease the car and then purchase it in 3 years or to purchase it today for $37,000 cash? Still assume an interest rate of 4.8% annually. EAR & APR Question 8: You own Huntington Beach Boats, and just received a purchase for a $1.5 million yacht. Unfortunately, you have no money in your business account and need to borrow to build the boat! It will cost you $800,000 to build and you will be able to pay back the money in a year. Three banks you have visited are willing to give you the money with the boat as collateral if the buyer does not pay. CSUSB Credit Union is offering you an $800,000 loan at 12% simple interest Huntington Beach Bank has offered you an $800,0000 loan at 11.8% compounded monthly. Finally, Bank of Laguna has offered you an 11% loan compounded continuously, for the same amount. Whose loan should you go with and what is the EAR of this loan? What is the APR of each loan
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