QuickHelper

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About QuickHelper

Levels Tought:
Elementary,High School,College,University,PHD

Expertise:
Accounting,Applied Sciences See all
Accounting,Applied Sciences,Business & Finance,Chemistry,Engineering,Health & Medical Hide all
Teaching Since: May 2017
Last Sign in: 357 Weeks Ago, 2 Days Ago
Questions Answered: 20103
Tutorials Posted: 20155

Education

  • MBA, PHD
    Phoniex
    Jul-2007 - Jun-2012

Experience

  • Corportae Manager
    ChevronTexaco Corporation
    Feb-2009 - Nov-2016

Category > Accounting Posted 13 Jun 2017 My Price 10.00

Discuss the Following Questions on Finance

 

Question description

 

 

Please respond to the following questions:

1. You've been saving up for a new car that you think costs $25,000. You already have $10,000 and you think that, with interest and additional savings, the $10,000 will grow to $20,000 in three years. Suddenly, the phone rings and a voice at the other end of the line tells you that you've won $5,000. You have the choice of collecting the $5,000 immediately, or collecting it in three years which will give you enough money to buy the car. What would you do? Assume that the price of the car stays constant over the three years and that available interest for bank savings is 3%.

  • 1a. You get the same prize but the choice changes to $5,000 now or $5,250 in three years. What do you do?
  • 1b. You get the same prize but the choice changes to $5,000 now or $5,500 in three years. What do you do?
  • 1c. Explain the time value of money using this scenario as an example.

2. What is the difference between EAR (effective annual rate) and APR (annualized percentage rate)? Which one does a better job of measuring return? Give an example (not from the book!) that illustrates your reasoning.

 

Answers

QuickHelper
(10)
Status NEW Posted 13 Jun 2017 09:06 PM My Price 10.00

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