You visited your bank and asked about car loan options you can avail for the purchase of a new car worth around Php1.2 million. Your contact provided you the following information for five year term loans: Option 1 - Make five equal annual year end payments. The rate the bank offers is 6.5%. Option 2 -- Make 10 equal semi-annual period end payments. The rate the bank offers is 6.35%. Option 3 -- Make 20 equal quarterly period end payments. The rate the bank offers is 6.3%. Option 4- Make 60 equal monthend payments. The rate the bank offers is 6.22%. 2 Compare the four options and recommend which alternative makes the most sense assuming you had the capacity to make payments for any of the 3 four payment terms. 4.
You visited your bank and asked about car loan options you can avail for the purchase of a new car worth around Php1.2 million. Your contact provided you the following information for five year term loans: Option 1 - Make five equal annual year end payments. The rate the bank offers is 6.5%. Option 2 -- Make 10 equal semi-annual period end payments. The rate the bank offers is 6.35%. Option 3 -- Make 20 equal quarterly period end payments. The rate the bank offers is 6.3%. Option 4- Make 60 equal monthend payments. The rate the bank offers is 6.22%. 2 Compare the four options and recommend which alternative makes the most sense assuming you had the capacity to make payments for any of the 3 four payment terms. 4.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:You visited your bank and asked about car loan options you can avail for the purchase of a new car worth around Php1.2 million.
Your contact provided you the following information for five year term loans:
Option 1- Make five equal annual year end payments. The rate the bank offers is 6.5%.
Option 2 - Make 10 equal semi-annual period end payments. The rate the bank offers is 6.35%.
Option 3 -- Make 20 equal quarterly period end payments. The rate the bank offers is 6.3%.
oOption 4 - Make 60 equal monthend payments. The rate the bank offers is 6.22%.
2 Compare the four options and recommend which alternative makes the most sense assuming you had the capacity to make payments for any of the
3 four payment terms.
4
15 (Detail all relavant assumptions and solutions.)
16
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