Scribd
Upload
67 views

Tugas - Rate of Return Analysis

This document contains 5 questions related to economics and finance. Question 1 asks about calculating the nominal and effective annual interest rates for a car loan. Question 2 asks about calculating effective annual interest rates for a car loan with an upfront processing fee. Question 3 asks about calculating the internal rate of return for an investment property. Question 4 asks about calculating the nominal annual rate of return for bonds purchased at a discount. Question 5 asks which of two investment alternatives should be chosen to meet a required minimum rate of return.

Uploaded by

Joshua Hutauruk
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
67 views

Tugas - Rate of Return Analysis

This document contains 5 questions related to economics and finance. Question 1 asks about calculating the nominal and effective annual interest rates for a car loan. Question 2 asks about calculating effective annual interest rates for a car loan with an upfront processing fee. Question 3 asks about calculating the internal rate of return for an investment property. Question 4 asks about calculating the nominal annual rate of return for bonds purchased at a discount. Question 5 asks which of two investment alternatives should be chosen to meet a required minimum rate of return.

Uploaded by

Joshua Hutauruk
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

TUGAS EKONOMIKA TEKNIK

1. Helen is buying a $12.000 car with a 30% down payment, followed by 36 monthly
payments of $300 each. The down paymentis paid immediately, and the monthly payments
are due at the end of each month.
a) What nominal annual interest rate is Helen paying?
b) What effective interest rate?

2. A used car dealer advertises financing at 0% interest over 3 years with monthly payments.
You must pay a processing fee of $250 at signing. The car you like costs $6000.
a) What is your effective annual interest rate?
b) You believe that the dealer would accept $5200 if you paid cash. What effective annual
interest rate would you be paying, if you financed with the dealer?

3. An apartment building in your neighborhood is for sale for $140,000. The building
has four units, which are rented at $500 per month each. The tenants have long-term
leases that expire in 5 years. Main- tenance and other expenses for care and upkeep are
$8000 annually. A new university is being built in the vicinity and it is expected that the
building could be sold for $160,000 after 5 years.
a) What is the internal rate of return for this invest- ment?
b) Should this investment be accepted if the other options have a rate of return of 12%?

4. A well-known industrial firm has issued $1000 bonds that carry 4% nominal annual
interest paid semiannu- ally. The bonds mature 20 years from now, at which time the
industrial firm will redeem them for $1000 plus the terminal semiannual interest payment.
From the financial pages of your newspaper you learn that the bonds may be purchased for
$715 each ($710 for the bond plus a $5 sales commission). What nominal annual rate of
return would you receive if you pur- chased the bond now and held it to maturity 20 years
from now?

5. The owner of a corner lot wants to find a use that will yield a desirable return on his
investment. After much study and calculation, the owner decides that the two best
alternatives are:

Alternative Build Build Soft


Gas Station Ice Cream Stand
First cost $80,000 $120,000
Annual property taxes 3,000 5,000
Annual income 11,000 16,000
Life of building, in years 20 20
Salvage value 0 0

If the owner wants a minimum attractive rate of return on his investmentof 6%, which of the
two alternatives would you recommend?

You might also like