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ololo11 [35]
2 years ago
7

Sam is comparing the costs of two loans. The principal amount of each loan is $5,000. One is due in one year and the other is du

e in four years. Both have the same stated rate of annual interest. Which of the following is truea. the princpal paid for the one-year loan will be lower than the princpal paid for the four-year loanb. the princpal paid for the one-year loan will be higher than the princpal paid for the four-year loanc. the interest charges for the one-year loan will be higher than the interest charges for the four-year loand. the interest charges for the one-year loan will be lower than the interest charges for the four-year loane. the interest charges and princpal payments cannot be compared for the two loans
Business
2 answers:
Naya [18.7K]2 years ago
8 0

Answer:

b. the princpal paid for the one-year loan will be higher than the princpal paid for the four-year loan

d. the interest charges for the one-year loan will be lower than the interest charges for the four-year loan

Explanation:

Sam is comparing the costs of two loans.

The principal amount of each loan is $5,000.

One is due in one year and the other is due in four years.

Both have the same stated rate of annual interest.

Two of the following are true:

<u>b. the principal paid for the one-year loan will be higher than the principal paid for the four-year loan.</u>

Considering the time value of money, $5000 principal repayment in one year time discounted at 5% will be 5000/1.05^1 = $4,761 but if repaid in 4 years = 5000/ 1.05^4 = $4,113.5

d. the interest charges for the one-year loan will be lower than the interest charges for the four-year loan

5% on 5,000 for 1 year = $250 but if paid for 4 years will be 250 x 4 = $1000

Liono4ka [1.6K]2 years ago
8 0

Answer:

D) the interest charges for the one-year loan will be lower than the interest charges for the four-year loan

Explanation:

Even though the principal and the APR are the same for both loans, the duration of the loans change the total interest charged by the lender. The longer the repayment period, the most interests you are going to pay.

We can use a loan calculator to determine the total interest charged on both loans:

  • loan 1, principal = $5,000, interest rate = 10%, n = 1 year ⇒ total interest charged = $274.95
  • loan 2, principal = $5,000, interest rate = 10%, n = 4 years ⇒ total interest charged = $1,087.02

The monthly payment is lower for the second loan, but the total interest paid during the four years is much higher.

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Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 45 million cases of cola were sold ever
Genrish500 [490]

Answer:

Tax on a case of cola is $4 per case.

The burden that falls on consumers is $1 per case.

The burden that falls on producers is $3 per case

False. This is due to the fact that producers already carry a greater share of the tax burden.

Explanation:

Tax on a case of cola = Amount that consumers pay after the tax has been charged - Amount producers receive = $7 - $3 = $4 per case

Burden on consumers = Amount consumers pay after the tax has been levied - Amount consumers pay before tax was levied = $7 - $5 = $1 per case

Burden on producers = Tax on a case of cola - Burden on consumers = $4 - $1 = $3 per case

False. This is due to the fact that producers already carry a greater share of the tax burden.

4 0
2 years ago
A stockbroker predicts whether a stock will go up or down by tossing a coin and so has a 50% chance of making a correct predicti
kolezko [41]

Answer:

A skilled  broker will be right at  60% of time compared to 50%

Explanation:

Solution

Given that:

Now,

Let X  be represented as = number of correct predictions/outcomes

X foll binomial distribution with n = 3 and p = 0.5 for broker who use a toss coin

Thus,

P(X = 3) = p^3 = 0.5^3 which gives us  = 0.125

So,

For a skilled broker, Y goes with the binomial distribution with n = 3 and p is = 0.6

Then,

P(Y = 3) = 0.6^3 = 0.216

We can therefore conclude who is skilled broker by making large number of observations

Hence, we say that a skilled broker will be correct 60% of time compared to 50% .

8 0
3 years ago
Assume Worldwide Cleaning Service had net income of $ 900 for the year. Worldwide Cleaning​ Service's beginning and ending total
g100num [7]

Answer:

return on assets = 20%

Explanation:

given data

net income = $900

beginning total assets = $4600

ending total assets = $4400

solution

we get here return on assets that is express as

return on assets = \frac{net\ income}{average\ assets} × 100   ............1

here average assets will be

average assets = \frac{4600+4400}{2}

average assets = $4500

put here value we get

return on assets = \frac{900}{4500} × 100

return on assets = 20%

4 0
3 years ago
How does the Federal Funds Rate affect consumers looking to take out a loan?
Artyom0805 [142]

Answer:

The federal funds rate is the rate at which banks borrow money overnight. When the Fed wants to stimulate the economy, it will lower the short-term funds borrowing rate. In response, banks typically lower the interest rates they charge to consumers for a variety of loans.

6 0
3 years ago
Meric Mining Inc. recently reported $15,000 of sales, $7,500 of operating costs other than depreciation, and $1,200 of depreciat
fomenos

Answer:

final net income = $3830.9375

Explanation:

GIVEN DATA:

sales = $15000

DEPRECIATION = $1200

interest rate = 6.25%

federal+state income tax rate -  35%

OPERATING COST EXCLUDING DEPRECIATION = $7500

total  operating cost = 7500+ 1200 = $8700

interest given = 6500*0.0625=406.25

net income with tax= 15000-8700-406.25 = 5893.75

final net income = 5893.75*(1-0.35)=3830.9375

4 0
3 years ago
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