You are interested in purchasing an automobile but you require financing. The dealer has provided you with several loan options to finance the purchase. Your market rate of return for the risk that you pose various lenders is 7%; The automobile that you want to purchase has a sticker price of $35.000 and a competitive market value of $31,000. Here are your loan options Loan 1 loan has a term of 60 months, a contractual rate of interest of 8% and requires a down payment of $1500 for the purchase of the car. The loan allows you to claim a rebate of $1000 on the car at purchase. Loan 2: The loan has a term of 72 months, a contractual rate of 7.5% and requires a down payment of $1000 for the purchase of the car. The loan allows you to claim a $500 rebate Loan 3: The loan has a term of 36 months a contractual interest rate of 0% and requires $4000 down. No rebate is available for this option. If you chose loan 1, and decide to pay the loan off early (after you've made payments for 24 months) what is the payoff balance of the loan (rounded to the nearest dollar)? Multiple Choice none of the choices O 18174 O 21029 17908 o o 0 0 17214 939.06 Use the following information to answer. Coupon Payments are annual unless otherwise indicated! Years Face Coupon Market Security Rating Maturity Value Rate Price Treasury 1 $ 1,000 0.00% $ 965.00 Treasury 3 $ 1,000 1.90% $ Treasury 5 $ 1,000 4.30% $ 932.42 Treasury 10 $ 1,000 6.80% $ 1,007.12 Treasury 15 $ 1,000 6.60% $ 908.25 Corp A A 5 $ 1,000 8.10% $ 990.00 Corp B BB 10 $ 1.000 7.90% $ 859.88 Corp C AA 15 $ 1.000 7.00% $ 660.00 What is the default risk premium for a BB debt security (round to two places) Multiple Choice 4.08% O 2.30% 3.50% O none of the above 3.35% The Chief Financial Officer of a company would like to raise money for new equipment by floating a new bond issue. The CFO would like to receive $1000 (full face value) for each of the bonds she sells. After collecting the below bond market data, and if the bonds carry a rating of A and have a term of 10 years, what coupon rate should be included in the bond contract? Assume an annual coupon payment Security & Rating Treasury Treasury Treasury Treasury Treasury CorpA A CorpB BB Corpc AA Maturity Face 1 $ 1,000 vo 3 $ 1,000 5 S 1,000 10 $ 1,000 15 $ 1,000 5 S 1,000 10 $ 1,000 15 S 1,000 Coupon 0.00% $ 1.90% $ 4.30% $ 6.80 $ 6.60% $ 8.10% $ 7.90% $ 7.00% $ Price 965.00 939.06 932.42 1,007.12 908.25 990.00 859.88 660.00 Multiple Choice O O 6.70% 9.15% O o none of the above O 2.45% O 8.35%