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fiasKO [112]
3 years ago
13

Refer to the following lease amortization schedule. The five payments are made annually starting with the inception of the lease

. A $2,000 bargin purchase option is exercisable at the end of the five-year lease. The asset has an expected economic life of eight years.
Lease Payment Cash Payment Effective Interest Decrease in Balance Balance
34,600
1 8,000 ?? ?? 26,600
2 8,000 2,660 5,340 21,260
3 8,000 2,126 5,874 15,386
4 8,000 1,539 6,461 8,925
5 8,000 ?? ?? ??
6 2,000 182 1,818 0
What is the effective annual inerest rate?
A. 9%
B. 10%
C. 11%
D. 20%
Business
1 answer:
Bogdan [553]3 years ago
3 0

Answer:

B. 10%

Explanation:

The computation of the effective annual interest rate is shown below:-

Effective annual interest rate = Lease payment third effective interest ÷ Lease payment second balance × 100

= $2,126 ÷ $21,260 × 100

= 10%

Therefore for computing the effective annual interest rate we simply applied the above formula.

Hence the correct option is B.

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Stephen and Joy own a duplex in Newport Beach, CA. They live in one unit and rent the other to another couple. Their rental inco
sertanlavr [38]

Answer:

$16,700

Explanation:

The computation of net income is shown below:-

Total expense = Insurance + Maintenance + Utilities + Depreciation

= $8,000 + $800 + $1,800 + $4,000

= $14,600

Expense of rented unit = Total expense ÷ Units

= $14,600 ÷ 2

= $7,300

Here, we assume 2 units

Net income for reporting = Rental income - Expense of rented unit

= $24,000 - $7,300

= $16,700

7 0
3 years ago
Ortega Company manufactures computer hard drives. The market for hard drives is very competitive. The current market price for a
Talja [164]

Answer:

$40

Explanation:

Target cost is the cost per unit arrived at after having deducted the required profit margin from the competitive market price.

It is a management technique that makes management think about ways to achieve a set target cost rather than forcing their actual cost plus profit margin on customers.

In this case, the competitive market price is $54 per unit of hard drive whereas the company expects to achieve a total profit of $14  per unit  

Profit margin per unit=$14

competitive market price=$54

Target cost=competitive market price-profit margin per unit

Target cost=$54-$14

Target cost=$40

7 0
4 years ago
According to the Solow growth model, high population growth rates:_________ a) are a prerequisite for technological advances and
sashaice [31]

Answer:

b) force the capital stock to be spread thinly, thereby reducing living standards.

Explanation:

Solow growth model: It is a model of economic growth, which was developed by Nobel laureate Robert Solow. It helps in analyzing the change in the output of production due to a change in population growth rate, saving rate and technological growth rate.

In the Solow growth model, an increase in population growth rates will increase the growth rate of the total output of production, however, there are no sharp changes in the growth rate of per capita output and decrease in capital intensity and saving rate, which reduce living standard.

8 0
3 years ago
Which of the following is a false statement?
ziro4ka [17]

A is false, some states don't have a flat tax.

4 0
3 years ago
Read 2 more answers
social media company needs money to expand, so it decides to issue stock. the first-time sale of the company's stock directly to
S_A_V [24]

When a social media firm needs funds to expand, it decides to sell stock. An initial public offering is the first time a company's shares are sold directly to the public (IPO). Hence, the correct answer is IPO.

<h3>What is an initial public offering?</h3>

An initial public offering (IPO) or stock launch is a public sale in which a company's shares are offered to institutional and, in most cases, individual investors. One or more investment banks often underwrite an IPO, as well as arrange for the shares to be listed on one or more stock exchanges. A privately owned corporation becomes a public company through this procedure, referred to colloquially as floating or going public. Initial public offerings (IPOs) can be used to raise additional equity capital for firms, to monetize the assets of private shareholders such as company founders or private equity investors, and to make current holdings or future capital raising easier to trade by becoming publicly traded.

To learn more about the initial public offering, click

brainly.com/question/14595967

#SPJ1

4 0
1 year ago
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