Objectives of financial reporting to external investors and creditors include preparing information about all of the following e
1 answer:
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The price elasticity of the loan taken by the entrepreneur comes out to be 10.
<h3>What is the price elasticity of demand?</h3>
The price elasticity of demand is an indicator used to determine the sensitivity of demanded quantity with respect to its corresponding price.
Given values:
Change in quantity demanded: 50%
Change in price: 5%
Computation of price elasticity of demand:
Therefore, when the change in quantity demanded is 50% with the change in the price is 5%, then the price elasticity of a business loan is equal to 10.
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Answer:
Year 1 = $1,100
Year 2 = $1,330
Year 3 = $1,550
Year 4 = $2,290
(a) If the discount rate is 6 percent, then the future value of these cash flows in Year 4:
To solve this problem, we must find the FV of each cash flow and add them. To find the FV of a lump sum, we use:
= $6737.51
(b) If the discount rate is 14 percent, then the future value of these cash flows in Year 4:
= $7415.17
(c) If the discount rate is 21 percent, then the future value of these cash flows in Year 4:
= $8061.47