Answer: 1 year and 6 months
Explanation:
The cash flows are as follows,
Year 0 = ($2,500)
Year 1 = $1,500
Year 2 = $1,500
Year 3 = $1,500
Payback period is the time it will take to break even the intial investment (In this question the initial investment is $2,500)
The sum of the cashflows of year1 and year2 is equal to $3,000
which means that the payback period is somewhere bbetween year 1 and year2
1500/3000 = 0.5 year or 6 months
the total payback period is 1 year and 6 months
Answer:
32.44 days
Explanation:
The computation of the average collection period is shown below:
But before that we have to determine the account receivable turnover ratio
So, the account receivable turnover ratio is
= (net sales) ÷ (average of account receivables)
= $25,875 ÷ ($2,400 + $2,200) ÷ 2
= $25,875 ÷ $2,300
= 11.25 times
Now the average collection period is
= Total no of days in a year ÷ account receivable turnover ratio
= 365 ÷ 11.25
= 32.44 days
We assume that the no of days that should be considered is 365 days
Answer:
The maximum interest rate which the bank needs to offer the loan is 3%
Explanation:
The maximum interest rate which the bank needs to offer the loan is computed as:
Maximum interest rate = Amount received in one year - Amount invested today / Amount invested today
where
Amount received in one year is $6,180
Amount invested today is $6,000
Putting the values above:
Maximum interest rate = ($6,180 - $6,000) / $6,000
= $180 / $6,000
= 3%
So, the maximum interest rate is 3% which is needed to offer by banks
