Question

FI 320 Spring 2020 Vou're on your way to Spring Break, credit card waiting to be used for all of the trip's expenses. You've calculated that, when you get back, you will only be able to afford monthly payments of $40. The card has an annual interest rate of 15%, and you have decided that you must have the card paid in full in 3 years. How much will you be able to spend on Spring Break? 10. While on Spring Break, you bought a ticket for the Lotto de Cancun, and you won 3 million Pesos. You are given a choice between receiving a check for 2 million Pesos immediately, or taking your winnings in annual instalments over the next 10 years. From a financial perspective, was discount rate of 10%, which is the optimal choice? A. Immediate check B. Annual instalments 11. A broker offers you an investment opp u an investment opportunity that will pay you $5000 a T T e duantage of this opportunity starting 2 C ay you $5000 a year for the next 3 years ortunity, you need to invest S14,000 up estment, should you do

Answer 1

Answeg page-01 From the problem monthly payment = $40 annual interest rate = 1516 card paid in a 3 years = 36 months - Required Spring Break. how much will you be able to spend on p=r(pu) p= Tacitojn where p » Regular payments PV = loan amount ja rate of interest no no. of periods. Substituting values. 40 (15:1. [12) Xpv illf1t151./12)35) 0.0125 pv l Tr 0,0125) 36

Page-02 0.0025 PV = ५० = 1.563943 40 : 0.01251 1.5639438-1 1.563१५38 ५० - 0.0125pv 0.5639438 1.56 3१५38 0.0195 1 = ५० 6. 360590842 40x6. 360590842 = 00105 pv 0 - 0125py = (५.५ 2.363368 pv = १५. 42363368 0.0/25 -1153.8906 JPv = 41153, 8१ ।