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BUS 401 week 2 DQ Principles of Finance

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Question;Week Two;Discussion Question One;Imagine that you have decided you need a new car;but not any car will do, you have decided to purchase the car of your dreams. Conduct;some research as to the cost of this car. You have determined in this;imagined scenario that you could afford to make a 10% down payment. You;can borrow the balance either from your local bank using a four-year loan or;from the dealership?s finance company. If you purchase from your;dealership?s finance company, the APR will be 10% with your 10% down and;monthly payments over three years. However, the dealership will give you a;rebate of 5% of the car price after the three year term is complete. You;want the best deal possible, so you consider the following questions;What type of car have you;selected, and what will it cost?;What is;the interest rate from your local bank for a car loan for four years?;What;will your payment be to your local bank, assuming your 10% down payment? Be;sure to use the formula provided in Chapter 4 and show your work. How much will;that car have cost in four years?;What;will your payment be to the dealership finance company assuming your 10% down;payment? Be sure to use the formula provided in Chapter 4 and show your work.;How much will that car have cost in 3 years?;Which is the better deal and why?;Discussion Question 2;Assume interest rates;for bonds today is 5% for an AAA rated bond. Calculate the price of the bond;you have selected relative to the 5%. Is the bond selling at a premium or a;discount? Why? Be sure to show how you arrived at your answer. What other;factors may influence the value of a bond?

 

Paper#49479 | Written in 18-Jul-2015

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