Complete the table by calculating the surplus or deficit both in absolute (dollar) terms and as a percentage of gdp. if necessar
2 answers:
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Answer:
1,386.67%
Explanation:
Loan Amount = $8.25
Repayment Amount = $10.45
Hence,
Interest for a week = Repayment Amount - Loan Amount
= $10.45 - $8.25
= $2.2
Interest percentage for a week:
=
=
= 26.66% (approx)
Number of weeks in a year = 52
Therefore,
Effective annual return:
= Interest percentage for a week × Number of weeks in a year
= 26.66% × 52
= 1,386.67%
Hence, effective annual return Friendly’s earns on this lending business is 1,386.67% .
APR you are paying 1,386.67%.
If the company requires a return of 10 percent for such an investment, calculate the present value of the project.
The present value of the project is $72349.51.
Since we consider only incremental cash flows for a project, we consider $21,600 for year one and calculate a 4% increase for each of the additional years.
We then calculate the Present Value Interest Factor (PVIF) at 10% for four years using the formula :
PVIF = 1 / [(1+r)^n]
Next, we find the product of the respective cash flows and PVIF for each year.
Finally, we find the total of the discounted cash flows for the four years to find the Present Value of the project.
