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ololo11 [35]
3 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]3 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]3 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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Answer:

Allocated cost:

B7= 0.23*600,000= 138,000

K6= 0.50*600,000= 300,000

X9= 0.27*600,000= 162,000

Explanation:

Giving the following information:

Ferrier Chemical Company makes three products, B7, K6, and X9, which are joint products from the same materials. In a standard batch of 150,000 pounds of raw materials, the company generates 35,000 pounds of B7, 75,000 pounds of K6, and 40,000 pounds of X9. A standard batch costs $600,000 to produce.

weighted average:

B7= 35,000/150,000= 0.23

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Allocated cost:

B7= 0.23*600,000= 138,000

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X9= 0.27*600,000= 162,000

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Karla Salons leased equipment from Smith Co. on July 1, 2021, in a finance lease. The present value of the lease payments discou
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Answer:

$4,455

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The computation of total decrease in earnings (pretax) in Morris Dec. 31, 2021, income statement is given below:-

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= $51,000 × 6% × 6 ÷ 12

= $1,530

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= $58,500 ÷ 10 × 6 ÷ 12

= $5,850 × 6 ÷ 12

= $2,925

So, the total decrease in earnings (pretax) in Morris Dec. 31, 2021, income statement = Interest expense upto 31 Dec 2021 + Depreciation expense upto 31 Dec 2021

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Users

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Which of these statements about a business plan is true?
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Caddie Manufacturing has a target debt-equity ratio of .95. Its cost of equity is 11 percent, and its pretax cost of debt is 7 p
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Answer:

8.20%

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Debt equity ratio = 0.95

or

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Therefore;

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= {0.05643} + {0.03409 × 0.76}

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