Purchase Solution

Is it better to finance or invest?

Not what you're looking for?

Ask Custom Question

Please help with the following problem.

Many times managers need to make decisions on what equipment to buy and how to finance it. Suppose you are in the market for a new car for your business. Choose a vehicle that will suit your needs. You have the cash to pay for it if needed. You can buy the car with cash or finance it at 2.9% for five years. What are some of the factors involved in making your decision? Assume that there are no tax implications. What part does the time value of money play in your decision? After analyzing the situation, what method would you use to pay for it? Support your answer. Please answer using quantitative analysis rather than your personal preference.

Purchase this Solution

Solution Summary

This solution discusses whether its better to finance or invest. The explanation is given in 156 words.

Solution Preview

In this problem, everything is irrelevant except 2.9% borrowing rate.

Let us assume that you have enough money to pay for the car, and you can also borrow at 2.9% for 5 years.

Should you borrow money or ...

Purchase this Solution


Free BrainMass Quizzes
Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Motivation

This tests some key elements of major motivation theories.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.