Question 1

The lifetime value of a typical customer in each segment when the discount rate is 15%.

You have been making payments for the last 25 years and have finally paid off your mortgage. Your original mortgage was for $345,000 and the interest rate was 5% per year compounded semi-annually for the entire 25 year period. How much interest have you paid over the last 5 years of the mortgage?

For option 2 I calculated the savings I receive from reduced payment. For that I used difference between the mortgage payments as annuity payment for 180 months for Question A and for 60 months for Question B

| |finance the balance. How much will each monthly loan payment be if they can borrow the necessary funds for 30 years at 9% per |

Challenge Problems 7-49 I. Given a) Honda Insight Original Price $17,995.00 b) Honda Insight Dealer Price $16,495.00 c) Terms: 1/15 n/30 II. Unknown a. How much is the rebate? b. What percent is the rebate? c. What is the amount of the discount if the dealer pays within 15 days?

a) In the first set of calculations, the staff used a discount rate of 20%, a five-year time horizon, and ignored taxes and terminal value. What is the relative attractiveness of these three alternatives?

Our biweekly payment program drafts half of your total mortgage payment out of your bank. This results in 26 half payments, or 13 full payments each year account every other week. Since only 12 payments are required to be made per year, the 13th payment is applied directly to the principal amount due, thereby reducing the principal faster than if regular

WILSON OFFERS HIS CUSTOMERS TERMS OF 2 % DISCOUNT FOR PAYMENT IN 10 DAYS WHAT WOULD COST.

1) Establish the principal and interest amount of the monthly payment. Using the 30 year loan principal and interest amount of the payment is $1,150.92

c) The present value of $500 to be received in one year when the opportunity cost rate is 8 percent (discounting):

g. The $15,000 long-term note is an 8%, 5-year, interest-bearing note with interest payable annually on December 31. The note was signed with First National Bank on December 31, 2011.

8. If you want to purchase a home. You have $15,000 to put down. All you can afford is $1,500.00 per month and you do not want to finance for more than 15 years @ 6% interest, (your taxes will be $85.00 per month and insurance $200.00 a month), what is the amount you can pay for your home? (Show all your work)

Natalie’s grandmother has decided to charge interest of 6% on the note payable extended on November 16. The loan plus interest is to be repaid in 24 months. (Assume that half a month of interest accrued during November.)

The Note Payable balance reflects the 90-day 10% (Annual Percentage Rate) $100,000 note that Platteville gave the bank on November 1, 2007. Interest is at maturity (5 points).

Assume that the annual payments in the sixth year is equal to the rental payment in the fifth year ( 112.9 and 86.0) and the remainder of the lump sum values (54.6 and 17.8) is due in the seventh year. With a discount rate of 5.4%, the present values of the rental payments for the years 2006 and 2007 are as follows: