Problem MEX-02 [Points: 1.5/3]. Assume you are a financial engineer of Wells Fargo and you authorize loan of $30,000 on Jan/01/2021 to a costumer that wants to buy a car. Downpayment is 20% of the value of the car ($6,000 upfront the client must deposit three months after the contract is signed (Apr/01/2021). Wells Fargo charges 5.5% nominal interest rate per year as it is advertised in TV commercials. Starting the second year (Jan/01/2022) the client must start paying back his/her debt in equal A payments at the end of every month (i.e. on Jan/31/2022, Feb/28/2022 and Mar/30/2022) for 3 months, as it is advertised in TV commercials. Observe how the interest is applied the last day of very month, not every year (i.e. paid compounded monthly). (a) [Points: 0.375/4] Draw the cash flow diagram from Wells Fargo point of view (incomes, deposits or downpayments = positive arrows upward = positive amounts of money; outcomes or disbursements = negative arrows downward = negative amounts of money). (b) [Points: 0.375/4] How much is that A amount the client needs to pay at the end of each month for 3 months? Use the time-transport method to align all cash to zero time (Jan/01/2021) in order to compute A. () [Points: 0.375/4] Use OUP tables to prove your outcome obtained in (b). (d) [Points: 0.375/4] Tabulate the progression of the cash flow in a table as shown below. You can do it by hand or you may fill the spreadsheet template supplied. Nominal interest rate / year 1 = Interest rate/month Disbursements Interest (profit from bank to Balance (at earned client throughout the Deposit of elient to Balance (at (beginning of beginning of month, charged bank (at the end of the end of cumulative Year Month Date month) month) at the end of month) month) profit 1 Jan/01/2021 Feb/01/2021 Mar/01/2021 Apr/01/2021 May/01/2021 Jun/01/2021 Jul/01/2021 Aug/01/2021 Sep/01/2021 Oct/01/2021 Nov/01/2021 Dec/01/2021 Jan/01/2022 Feb/01/2022 Mar/01/2022 the Bank's 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 2 Problem MEX-02 [Points: 1.5/3]. Assume you are a financial engineer of Wells Fargo and you authorize loan of $30,000 on Jan/01/2021 to a costumer that wants to buy a car. Downpayment is 20% of the value of the car ($6,000 upfront the client must deposit three months after the contract is signed (Apr/01/2021). Wells Fargo charges 5.5% nominal interest rate per year as it is advertised in TV commercials. Starting the second year (Jan/01/2022) the client must start paying back his/her debt in equal A payments at the end of every month (i.e. on Jan/31/2022, Feb/28/2022 and Mar/30/2022) for 3 months, as it is advertised in TV commercials. Observe how the interest is applied the last day of very month, not every year (i.e. paid compounded monthly). (a) [Points: 0.375/4] Draw the cash flow diagram from Wells Fargo point of view (incomes, deposits or downpayments = positive arrows upward = positive amounts of money; outcomes or disbursements = negative arrows downward = negative amounts of money). (b) [Points: 0.375/4] How much is that A amount the client needs to pay at the end of each month for 3 months? Use the time-transport method to align all cash to zero time (Jan/01/2021) in order to compute A. () [Points: 0.375/4] Use OUP tables to prove your outcome obtained in (b). (d) [Points: 0.375/4] Tabulate the progression of the cash flow in a table as shown below. You can do it by hand or you may fill the spreadsheet template supplied. Nominal interest rate / year 1 = Interest rate/month Disbursements Interest (profit from bank to Balance (at earned client throughout the Deposit of elient to Balance (at (beginning of beginning of month, charged bank (at the end of the end of cumulative Year Month Date month) month) at the end of month) month) profit 1 Jan/01/2021 Feb/01/2021 Mar/01/2021 Apr/01/2021 May/01/2021 Jun/01/2021 Jul/01/2021 Aug/01/2021 Sep/01/2021 Oct/01/2021 Nov/01/2021 Dec/01/2021 Jan/01/2022 Feb/01/2022 Mar/01/2022 the Bank's 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 2