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sashaice [31]
3 years ago
5

In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $20,000 and the i

nterest rate is 10%, the borrower "pays" 0.10 × $20,000 = $2,000 immediately, thereby receiving net funds of $18,000 (=$20,000-$2,000) and repaying $20,000 in a year. "What is the implied rate on this loan?"a. 10%b. 9.5%c. 11.1%d. 20%
Business
1 answer:
Vikki [24]3 years ago
8 0

Answer:

c. 11.1%

Explanation:

The formula to compute the implied rate is shown below:

Future Value  = Present Value ×  (1 + Interest rate)

$20,000 = $18,000 × (1 + Interest rate)

$20,000 = $18,000 ×  (1 + Interest rate)

So,  (1 + Interest rate) = 1.1111

So, the interest rate is

= 1.1111 - 1

= 0.1111 or 11.1%

We simply applied the above formula to determine the implied rate on this loan

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J&J Enterprises wants to issue eighty 20-year, $1,000 zero-coupon bonds. If each bond is to yield 8%, how much will J&J
vitfil [10]

Answer:

$17,163.86

Explanation:

to calculate how much J&J Enterprises will receive, we need to determine the present value of one bond:

present value = future value / (1 + interest rate)ⁿ

  • future value = face value = $1,000
  • interest rate = 8%
  • n = 20 years

present value = $1,000 / (1 + 8%)²⁰ = $1,000 / 1.08²⁰ = $1,000 / 4.66 = $214.55 per bond x 80 bonds = $17,163.86

5 0
3 years ago
The classification and normal balance of the drawing account are a.expense, debit balance b.expense, credit balance c.liability,
Elis [28]

Answer:

The answer is D. owner's equity, debit balance

Explanation:

Drawing is the money or goods taken out from business by its owner. This act is usually common in partnership or sole proprietorship.

A drawing is not an expense, rather it is a reduction in owner's equity.

To credit owner's equity means to increase its equity and to debit owner's equity means to decrease or reduce its equity.

Since, drawing is a reduction in owner's equity, we debit owner's equity making option D. the correct answer.

Option A and B are wrong because drawings are not classified as an expense.

Option C is also wrong because a drawing is never a liability.

7 0
3 years ago
San Francisco Corporation uses two materials in the production of its product. The materials, X and Y, have the following standa
levacccp [35]

Answer:

(1) Material usage variance for X: 1,500 (Favorable)

(2) Material usage variance for Y: -19,500 (Adverse)

Explanation:

Material usage variance for X:

Standard Mix for actual Yield:

= (Standard mix of material X ÷ Yield) × Yield actual mix

= (3,500 ÷ 4,000) × 36,000

=  31,500

Material Usage Variance:

= (Standard Mix for actual Yield- Actual Mix) × Standard unit price

= (31,500-30,000) × $1

= 1,500 (Favorable)

Material usage variance for Y:

Standard Mix for actual Yield:

= (Standard mix of material Y ÷ Yield) × Yield actual mix

= (1,500 ÷ 4,000) × 36,000

=  13,500

Material Usage Variance:

= (Standard Mix for actual Yield- Actual Mix) × Standard unit price

= (13,500 - 20,000) × $3

= -19,500 (Adverse)

Total = (19,500) + 1,500

        = (18,000) [Adverse]

4 0
3 years ago
Tom is talking to his friend Bob, who has an interest in Freedom, LLC, about purchasing his LLC interest. Bob's outside basis in
sleet_krkn [62]

Answer:

Option B is correct.

Tom's outside basis be in Freedom,LLC=$26,100

Explanation:

Option B is correct.

Amount Paid by Tom for buying Bob's LLC interest=$23,000

Tom's Share of LLC debt= $3,100

Tom's outside basis be in Freedom,LLC= Amount Paid by Tom for buying Bob's LLC interest + Tom's Share of LLC debt

Tom's outside basis be in Freedom,LLC= $23,000+$3,100

Tom's outside basis be in Freedom,LLC=$26,100

8 0
3 years ago
President Obama addressing the recent graduates in a commencement exercise is an example of a(n) _____________ speech
olya-2409 [2.1K]
The answer is ethics, I believe.

5 0
3 years ago
Read 2 more answers
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