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Kryger [21]
3 years ago
10

Assume a bank loan requires an interest payment of $85 per year and a principal payment of $1,000 at the end of the loan's eight

-year life. At what amount could this loan be sold for to another bank if loans of similar quality carried an 8.5 percent interest rate? That is, what would be the present value of this loan?
Business
1 answer:
FromTheMoon [43]3 years ago
7 0

Answer:

1,000

and 1,000

Explanation:

The loan rate is 8,5%

85/1000 = 8.5

The market rate is 8.5

So the loan should be sold at 1,000 which is the face value of the loan, because there is no difference between the market rate and the loan rate.

This can be calculated anyway to prove it:

present value of the annuity of $85 during 8 years at 8.5% market rate

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 85

time 8

rate 0.085

85 \times \frac{1-(1+0.085)^{-8} }{0.085} = PV\\

PV $479.3306

Present value of the maturity date:

\frac{Maturity}{(1 + rate)^{time} } = PV

Maturity 1000

time 8

rate 0.085

\frac{1000}{(1 + 0.085)^{8} } = PV

PV  $520.6694

Total present value

PV c $479.3306

PV m  $520.6694

Total $1,000.0000

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grandymaker [24]

Answer:

It is more profitable to sell the units as-is.

Explanation:

Giving the following information:

Number of units= 12,600

Varto has two alternatives for these items:

(1) they can be sold to a wholesaler for $13 each

(2) they can be processed further for $272,300 and then sold for $34 each.

The first cost of $31 is a sunk cost, it will remain no matter which option is chosen. We will not take it into account for the decision making process.

Option 1:

Effect on income= 12,600*13= $163,800

Option 2:

Effect on income= 12,600*34 - 272,300= $156,100

It is more profitable to sell the units as-is.

7 0
3 years ago
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Answer: Sales orientation

Explanation:

A firm that makes use sales orientation is focused on making its products and services very good and affordable. When a sales orientation strategy is adopted, the goal is to sell many goods and services without the firm worrying about marketing to its target audience.

The idea is that by making a product or service that is superior and being sold at the right price, which is combined with aggressive sales tactics, firms can convince people to purchase whatever they are selling. With the explanation, we can infer that the company Harvey works for uses a sales orientation.

4 0
4 years ago
What is a federal reserve note in simple terms?
valina [46]
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6 0
3 years ago
The demand for labor curve shows:a. an inverse relationship between the real wage and the amount of laborhired.b. a positive rel
ankoles [38]

Answer:

The correct answer here is d.

Explanation:

Real wage is the nominal wages adjusted for price changes. It reflects the purchasing power earned by the workers.

There will be a direct and positive relationship between real wages and number of workers who are willing to work. This means when there is an increase in the real wages, more workers will be willing to work because they will be earning more. Reverse will be the situation in case of reduced real wages.

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Akimi4 [234]

Answer:

Unstructured interview

Explanation:

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On the other structured interview is when questions are prearranged and candidates are asked the same questions.

So when Matt and Claire go into an interview for the same position and they get asked very different questions depending on how the interview is going, they are answering unstructured interview questions.

7 0
3 years ago
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