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Yakvenalex [24]
4 years ago
10

A small business owner visits his bank to ask for a loan. The owner states that she can repay a loan at $2,500 per month for the

next two years and then $3,000 per month for another two years after that. If the bank is charging customers 6.5 percent APR, how much would it be willing to lend the business owner?
Business
1 answer:
Iteru [2.4K]4 years ago
5 0

Answer:

Present value = $115,278.17

Explanation:

Given data:

Monthly repay amount for 2 year = $2500

Monthly repay amount for another 2 year = $3500

APR =6%

monthly interest rate = 6.50/12 = 0.54167%

Present value is calculated as

Present value = \frac{monthly payment}{(1 + monthly rate)^n}

Present value = \frac{2500}{(1 + 0.54167\%)^1} +\frac{2500}{(1 + 0.54167\%)^2} +........ + \frac{2500}{(1 + 0.54167\%)^{24}} +  \frac{3000}{(1 + 0.54167\%)^{25}} + ...... + \frac{3000}{(1 + 0.54167\%)^{48}}

Present value = 2500\times \frac{(1-(\frac{1}{1.0054167})^{24})}{0.0054167} + 3000\times \frac{(1-(\frac{1}{1.0054167})^{24})}{0.0054167}

Present value = $115,278.17

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shepuryov [24]

Answer:

The correct answer is letter "A": the discount rate that makes the net present value of a project equal to the initial cash.

Explanation:

The Internal Return Rate, or IRR, is a central component of corporate finance capital budgeting. Companies use it to determine which discount rate will make the Present Value of the after tax cash flows equal to zero (0). Any project that returns an IRR greater than 0 ads has a value.

<em>In the decision-making process, IRR is subordinated to Net Present Value because it is preferred an absolute dollar amount that is higher than a higher IRR.</em>

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3 years ago
You are a delivery manager introducing a new product from your unit to the market. What steps should you take to mitigate any IP
schepotkina [342]

Answer:

Explanation:

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3 0
3 years ago
Once a customer has committed to a partnership, less work is needed to maintain the relationship.
alex41 [277]
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4 0
3 years ago
Mickley Company’s plantwide predetermined overhead rate is $18.00 per direct labor-hour and its direct labor wage rate is $12.00
ipn [44]

Answer:

Results are below.

Explanation:

Giving the following information:

Predetermined overhead rate= $18.00 per direct labor-hour

Direct labor wage rate= $12.00 per hour.

Job A-500

Direct materials $220

Direct labor $60

<u>First, we need to calculate the direct labor hours:</u>

Direct labor hours= 60/12= 5

<u>Now, we can allocate overhead:</u>

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

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<u>Finally, the unit cost:</u>

<u></u>

Total cost= 220 + 60 + 90= $370

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5 0
3 years ago
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ankoles [38]

Answer: False

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Hence, from the above explanation we can conclude that the given statement is incorrect.

4 0
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