a) Khaleef, a football player is negotiating with BBB Club regarding his contract. His opportunity cost...

 

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a) Khaleef, a football player is negotiating with BBB Club regarding his contract. His opportunity cost is 6%. He has been offered three possible 4-year contracts. Payments are guaranteed, and they would be made at the end of each year. Terms of each contracts are as follows: Year Contract 1 Contract 2 RM5,000,000 RM4,000,000 RM5,000,000 RM5,000,000 RM5,000,000 RM5,000,000 RM6,000,000 RM7,000,000 Contract 3 RM8,000,000 RM4,000,000 RM4,000,000 RM4,000,000 As adviser, which contract would you recommend that he accept? (10 marks) b) Mr Khaleef needs RM40,000 to buy her dream car. In her search for the best (low cost) loan, she has gathered the following information from three local banks. Which bank would you recommend Mr Khaleef borrow from? Annual Payment RM16,652.80 Bank A B 12,618.30 C 10,822.50 Term (years) 3 45 5 (10 marks) c) To expand its operation, Dhadibas Tools Inc. has applied to the International Bank for a 3 year, RM50, 000 loan. Prepare a loan amortization table assuming 8 percent rate of interest. (10 marks) a) Khaleef, a football player is negotiating with BBB Club regarding his contract. His opportunity cost is 6%. He has been offered three possible 4-year contracts. Payments are guaranteed, and they would be made at the end of each year. Terms of each contracts are as follows: Year Contract 1 Contract 2 RM5,000,000 RM4,000,000 RM5,000,000 RM5,000,000 RM5,000,000 RM5,000,000 RM6,000,000 RM7,000,000 Contract 3 RM8,000,000 RM4,000,000 RM4,000,000 RM4,000,000 As adviser, which contract would you recommend that he accept? (10 marks) b) Mr Khaleef needs RM40,000 to buy her dream car. In her search for the best (low cost) loan, she has gathered the following information from three local banks. Which bank would you recommend Mr Khaleef borrow from? Annual Payment RM16,652.80 Bank A B 12,618.30 C 10,822.50 Term (years) 3 45 5 (10 marks) c) To expand its operation, Dhadibas Tools Inc. has applied to the International Bank for a 3 year, RM50, 000 loan. Prepare a loan amortization table assuming 8 percent rate of interest. (10 marks)

Answer rating: 100% (QA)

a To determine which contract Khaleef should accept we need to calculate the present value PV of each contract and compare them The PV represents the ... View the full answer