A commercial real estate developer plans to borrow money to finance an upscale mall in an exclusive area of the city. The develo
per plans to get a loan that will be repaid with uniform payments of $475,000 beginning in year 2 and ending in year 16. How much will a bank be willing to loan at an interest rate of 7% per year
1 answer:
Answer:
$4,043,232.85
Explanation:
First we have to compute the present value which is attached in the spreadsheet
Given that,
Future value = $0
Rate of interest = 7%
NPER = 15 years
PMT = $475,000
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after solving this, the present value is $4,326,259.15
No the loan amount would be
= (Present value) ÷ (1 + interest rate)
= $4,326,259.15 ÷ 1.07
= $4,043,232.85
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Answer:
The correct answer is letter "C": the Macro Islands have a comparative advantage in producing fishing boats, and the Micro Islands have a comparative advantage in producing guava jelly.
Explanation:
Comparative advantage is an advantage an individual, organization or country has to use <em>opportunity costs</em> in their production compared to their competitors. The scenario described above does not imply that the individual, organization or country has an absolute advantage.
In the example proposed:
- Comparative advantage of Macro islands in fishing boats =
- Comparative advantage of Micro islands in fishing boats =
- Comparative advantage of Macro islands in jars =
- Comparative advantage of Micro islands in jars =
Thus, <em>the Macro Islands have a comparative advantage in producing fishing boats, and the Micro Islands have a comparative advantage in producing guava jelly.</em>