Answer:
Ans. The effective annual interest rate charged on the loan is 12.99% effective annually. (Please see the attached excel spread sheet)
Explanation:
Hi, attached is the amortization table that I made for this case. Notice that there is a yellow and green cell, the yellow one is the result of using the "IRR" function of MS Excel which provides an effective monthly rate, since the payments are made every month, then we have to transform that monthly effective rate into an effective annual rate, this is the formula to use.
That is:
Which we round to 12.99% effective annually.
Finally, notice that I didnt use the payments to find the effective rate, I used the cash flow, that was because you didn´t receive all the 100K (the fee, remember?), you received $98,000.
Best of luck.
Answer:
X=97.24
Explanation:
PV = Present Value = X+2000 by the 16th years
PMT = Payments = $100
FV = Future Value = 2000 at the end of 16 years
n= number of years
Applying the equation of future value for annuity
FV = pmt* ((1+r)ⁿ - 1
)/r
Inputting the values;
2000=100*((1+r)¹⁶-1)/r
Solving for r, gives r = 2.9%
Therefore using the formula for PV for annuity;
PV=PMT*(1-(1/1+r)/r)
X=100*(1-(1/1.029)/0.029
X=100*((1-0.9718)/0.029)
X=100*(0.0282/0.029)
X=97.24
Answer:
$36
Explanation:
The contribution margin per unit is calculated by subtracting the variable cost per unit from the selling price.
Selling price is $60
Contribution margin per unit?
The total sales in dollar value are $15,000, The sales in units equal to
=$15,000 /60
=250 units
Total variable costs will include variable manufacturing cost plus variable selling and administrative costs
=$4000 + $2000
=$6000
variable cost per unit will be the total variable cost divide by units produced
=$6000/250
=$24
Contribution margin per unit = $60- $24
=$36
Answer: d. A price near $60
Explanation:
The Preferred Stock was selling at $56 then a notice was circulated that RMO would be calling the stock at a price of $60.
This $60 is more than the current $56 and so this will need to reflect in the price of the stock. The adjustment will cause the Preferred stock to start trading near $60 as traders will seek to take advantage of the impending call by buying at a lower price and thus making a bit of profit when the stock is called at $60. The market will adjust to this because the Preferred stock will be perceived as undervalued. A price closer to the Call price will therefore become the new price to properly value the stock.
Answer:
Increase price.
Explanation:
Price elasticity is the degree of responsiveness of quantity demanded to changes in price. Ideally as price increases quantity demanded reduces. When prices reduce quantity demanded increases.
As a new manager of Rock Record company, if the economics consultants inform you the price elasticity is less than one it means quantity does not change with increase in price.
So price can be increased without a corresponding decrease in price. The goal of higher revenue can be achieved by increasing the product price.
