Price elasticity of supply is defined as the degree to which quantity of a product supplied is sensitive to changes in price.
In a competitive market when the price of a good increases its supply also increases. This is because suppliers want to make more profit from the higher product price.
Price elasticity of supply = %∆ Quantity ÷ %∆ price
In this specific scenario, it can be said that Yes the seller can refuse to pay the broker a commission. This is because the broker's license ceases to be in force when the broker changes his address without notifying the FREC within 10 days. Therefore, since the broker moved and did not notify the FREC where he moved to, and did not register his new address then the seller is within his rights to refuse payment to the broker.
ii. How much interest did the firm pay on the loan in the past year?
during year 2, $23,458 was paid in interests ($28,833.33 was paid in interest during year 1).
iii. Suppose starting next year (fourth year) the loan rate jumps to 7.2% APR. What is the remaining balance? What will be the monthly payment?
the remaining balance at the beginning of year 4 is $475,916
the new monthly payment will be $3,375.72
Explanation:
I prepared two amortization schedules using an excel spreadsheet. The principal on the loan was $500,000. The first one has a fixed 4.8% APR for the whole 30 years. In the second one, the APR changes to 7.2% at the beginning of year 4.
