A bank is negotiating a loan. The loan can either be paid off as a lump sum of $80,000 at the end of four years, or as equal ann
ual payments at the end of each of the next four years. If the interest rate on the loan is 6%, what annual payments should be made so that both forms of payment are equivalent
1 answer:
Answer:
$18,287.32
Explanation:
We use the PMT formula i.e shown in the attachment below:
Data provided in the question
Present value = $0
Future value = $80,000
Rate of interest = 6%
Time period = 4 years
The formula is shown below:
= NPER(Rate;PMT;PV;-FV;type)
The future value come in negative
So, after solving this, the annual payments should be made is $18,287.32
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Answer:
$4,783.88
Explanation:
As for the provided information, the problem is based on activity based costing.
There are 3 activities:
i) Design Changes = $120,000 for 500 changes
Cost per change = = $240 for each change
ii) Setups = $380,000 for 4,000 setups
Cost per setup = = $95 for each setup
iii) Inspections = $100,000 for 9,000 inspections
Cost per inspection = = $11.11
In case of Money Managers, there is printing of 70,000 pages
Design charges = 12 design changes $240 = $2,880
Setup charges = 17 setups $95 = $1,615
Inspection charges = 26 inspections $11.11 = $288.88
Total overhead cost for Money Managers = $2,880 + $1,615 + $288.88 = $4,783.88