Question
There are four options of a loan payment scheme Upfront payment of $4700 Over a 36 month plan with $140 per month paid at the
There are four options of a loan payment scheme
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Upfront payment of $4700
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Over a 36 month plan with $140 per month paid at the end of each month
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Payment of $5,600 at the beginning of the third year
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A monthly payment of $250 per month, starting from today and a final payment being made 17 months from today.
Interest rate applicable is 8% p.a. compounded monthly.
Compare Options 3 and 4 for parts c) and d) below;
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if you wish to make monthly payments in Option 4 at 8% p.a., what is the payment amount that would make you indifferent between Option 3 and 4.
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If the monthly payment of Option 4 were made at the end of each month, how would your answer to part b) on the monthly payment amount be different. EXPLAIN WITHOUT ANY CALCULATIONS.
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You chose Option 3 to purchase a hi-fi stereo set-up. Six months later after having commenced making payments, market interest rates change. Would this change have made your decision better off or worse off, if
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Market interest rates were to rise and if
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Market interest rates were to fall.
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EXPLAIN WITHOUT ANY CALCULATIONS
This was all the information given in the question.
A quick response would be greatly appreciated! Thank you so much! <3
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