Answer:
What will Sam have to pay for this equipment if the loan calls for semiannual payments (2 per year)
and monthly payments (12 per year)?
Compare the annual cash outflows of the two payments.
- total semiannual payments per year = $2,820.62 x 2 = $5,641.24
- total monthly payments per year = $531.13 x 12 = $6,373.56
Why does the monthly payment plan have less total cash outflow each year?
- The monthly payment has a higher total cash outflow ($6,373.56 higher than $5,641.24), it is not lower. Since the compounding period is shorter, more interest is charged.
What will Sam have to pay for this equipment if the loan calls for semiannual payments (2 per year)?
- $2,820.62 x 12 payments = $33,847.44 ($25,000 principal and $8,847.44 interests)
Explanation:
cabinet cost $25,000
interest rate 10%
we can use the present value of an annuity formula to determine the monthly payment:
present value = $25,000
PV annuity factor (5%, 12 periods) = 8.86325
payment = PV / annuity factor = $25,000 / 8.8633 = $2,820.62
present value = $25,000
PV annuity factor (0.8333%, 60 periods) = 47.06973
payment = PV / annuity factor = $25,000 / 47.06973 = $531.13
Individual productivity in the workplace entails executing tasks that advance you toward achieving your objectives in a timely manner and contribute to your work-life balance and simplicity. You divide the average production for a given period by the expenses incurred or the resources, such as staff, used during that period to determine productivity.
Being able to create, especially quickly and with excellent quality, is a sign of productivity. Making excellent school tasks in a short amount of time is an example of productivity. How quickly toys can be produced in a toy factory is an illustration of productivity.
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The next monthly interest payment on a loan with a principal balance of $19,531 is $109.86. 6.75% is the interest rate on the loan.
The interest rate is the percentage of the loan that the borrower pays to the lender. Most loans pay interest in addition to the principal. Lending rates are usually expressed in his APR or APR which includes both interest and fees.
Monthly Interest Payment means the amount of interest payable on the Payment Date for the preceding Interest Period based on the interest calculated at the Monthly Interest Rate for the preceding Interest Period.
Interest is an additional payment known as interest on top of the principal paid to a lender for the right to borrow money.
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Answer:
Determine whether the following bonds payable will be issued at face value, at a premium, or at a discount:
a.The market interest rate is 8%. Idaho issues bonds payable with a stated rate of 7.75%.
- Bonds issued at discount because market rate is higher than the bond's coupon rate.
b.Austin issued 9% bonds payable when the market interest rate was 8.25%.
- Bonds issued at premium because market rate is lower than the bond's coupon rate.
c.Cleveland's Cars issued 10% bonds when the market interest rate was 10%.
- Bonds issued at par because bond's coupon rate is equal to the market rate.
d.Atlanta's Tourism issued bonds payable that pay the stated interest rate of 8.5%. At issuance, the market interest rate was 10.25%.
- Bonds issued at discount because market rate is higher than the bond's coupon rate.
