Answer:
The annual interest rate charged would be 8%
Explanation:
The annual interest rate which is charged by the parents for the loan is computed as:
Interest rate = (Amount repaid for loan - Lent amount by parents) /Lent amount by parents × 100
where
Lent amount by parents is $400
Amount repaid for loan is $432
Putting the values above:
Interest rate = ($432 - $400) / $400 × 100
Interest rate = $32/ $400 × 100
Interest rate = 0.08 × 100
Interest rate = 8%
I believe the answer is:
- What can go wrong?
This question is asked to find out the potential risk that may occur after purchasing the product.
- What is the likely return?
This question is asked to find out potential benefit from consuming the product
-Is the risk worth the return?
<span>The purchase should be made only if the potential benefit would outweigh potential risk
</span>
Amount of interest expense on 30th June 20X1= Carrying Amount of Bond*Effective Interest Rate (For 6 Months)
=$940000*5/100
=$47000
Contractual Interest of the bond=Face Value*Contractual Interest
=1000000*4/100
=$40000
Thus, Carrying Amount of Bond=Carrying Amount|+Interest Expense-Interest Paid
Carrying Amount as on 30th June=940000+47000-40000
Carrying amount as on 30th June=$947000
Amount Paid to Redeem Bonds =$1020000
Gain/(Loss) on Redemtion of Bonds=Face Value-Amount Paid to Redeem Bonds
Loss on Bonds=-$73000
If the required rate of return is 7.2%, no such security shall be purchased.
<h3>What does the required rate of return mean?</h3>
The required rate of return is the expected percentage of returns on investment at the time the investment is made. The required rate of return, in this case, is 7.2%.
The actual returns earned from purchasing the security for $8000 and receiving returns of $3600 are calculated to be around a 3.6% return.
As a result, if the required rate of return on investment is 7.2%, the security should not be purchased.
Read more about the required rate of return here:
brainly.com/question/13987385
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