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1 year ago

Where do financial institutions get the funds that they lend to customers?

1 answer:

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Banks typically generate income by borrowing funds from depositors and paying them back at a predetermined interest rate. By charging the borrowers a higher interest rate and making money off the interest rate spread, the banks will lend the money to borrowers.

Banks obtain savings from individuals and companies (savers) and use these resources to issue loans to others who need money (borrowers). One of the biggest funding expenses for banks is the interest they must pay on the money they receive from savers.

Finance companies make money by selling securities, primarily commercial paper, to other companies, including banks, in the money market. They then lend the money to people or corporations at an interest rate that is higher than what they pay on their securities.

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1 year ago

One of your customers is delinquent on his accounts payable balance. You’ve mutually agreed to a repayment schedule of $500 per

jekas [21]

Answer: Number of months = 66.87 months

Explanation:

Given that,

Monthly Payment = $500

Interest rate(r) = 1.95% per month

Current Balance = $18,500

Number of months(t) = ?

$Current\ balance = Monthly\ payment\times(\frac{1-present\ value\ factor}{r})$

$Current\ balance = Monthly\ payment\times(\frac{1-\frac{1}{(1+r)^{t}} }{r})$

$18,500 = 500\times(\frac{1-\frac{1}{(1+0.0195)^{t}} }{0.0195})$

$\frac{18,500}{500}\times0.0195=1-\frac{1}{1.0195^{t} }$

$\frac{1}{1.0195^{t}}=1-0.7215$

$1.0195^{t}=\frac{1}{0.2785}$

$1.0195^{t}=3.5906$

Taking log on both side

t log(1.0195) = log(3.5906)

$t = \frac{0.5551}{0.0083}$

t = 66.87 months

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3 years ago

Preparation of a statement of cash flows involves five steps:

adelina 88 [10]

Answer:

Preparation of a statement of cash flows involves five steps

1. Compute net cash provided or used by operating activities.

This is the section where all the cash flow that belongs to the operating section are been added and subtracted according to the inflow and outflow of the transaction.

2. Compute net cash provided or used by investing activities.

This is the section where all the cash flow that belongs to the investing section are been added and subtracted according to the inflow and outflow of the transaction.

3. Compute net cash provided or used by financing activities.

This is the section where all the cash flow that belongs to the financing section are been added and subtracted according to the inflow and outflow of the transaction.

4. Compute the net increase or decrease in cash

This is the section where the cash-flow from operating, investing and financing activities is been balanced.

5. Report the beginning and ending cash balances and prove that the ending cash balance is explained by net cash flows.

After the cash-flow from operating, investing and financing activities is been calculated, Then, this section is also computed to derive the Closing/Ending cash balance

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2 years ago

"Diminishing marginal returns" refer to a situation in which the ______.A. average product of the last worker hired is less tha

galben [10]

Answer: C. marginal product of the last worker hired is less than the marginal product of the previous worker hired

This statement is correct because marginal product refers to the increase in the production, when 1 worker is added to the production process. Diminishing marginal returns set in when adding one extra worker increases the production less than the previous worker did.

Explanation:

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3 years ago

taxes: a. are unlikely to affect market supply and demand b. are copmulsory payments to governments c. never affect efficiency i

Crank

Answer:

The answer is B.

Explanation:

Taxes are compulsory payment levied by a government of a country. It is not voluntary.

We have direct and indirect tax.

Direct taxes are those taxes that are imposed on individual and company. A company is charged at a rate after its profit is known. An individual earning salary is charged before the salary is collected.

Indirect taxed are those levied on goods and services. These types of taxed are pass on to the consumers in form of price of goods.

Tax is mandatory for everyone. Its a revenue for government

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3 years ago