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kicyunya [14]
2 years ago
13

Your uncle the banker offers to lend you $25,000 to start a new business. You will have to make a payment of $7,000 at the end o

f each of the next 3 years plus a final payment of $10,000 at the end of Year 4. What annual interest rate is built into this loan?
Business
1 answer:
Sergio [31]2 years ago
7 0

Answer:

Annual interest rate = 6%

Explanation:

Amount of loan = $25,000

The total amount repaid:

($7,000 × 3 years) + ($10,000 balloon payment)

= (7,000 × 3) + (10,000)

21,000 + 10,000 = $31,000

Interest on payment = repayed amount - loaned amoun

Interest on payment = 31,000 - 25,000 = $6,000

Let the total percentage on the loaned amount be x

Therefore we are looking for what percentage rate of the loaned amount ($25,000) will give the interest of $6,000

x % of 25,000 = 6,000

\frac{x}{100} \times\ 25,000 = 6,000\\\frac{25,000x}{100} = 6,000\\25,000x = 600,000\\x = \frac{600,000}{25,000}\\x = 24

Therefore the total percentage interest rate = 24%

Annual interest rate = Total interest rate ÷ number of years

Annual interest rate = 24 ÷ 4 = 6%

∴ Annual interest rate = 6%

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The calculation of a revised break-even point in units for the firm as a whole, using the weighted-average contribution margin approach is 1,155,556 units.

<h3>What is the weighted-average contribution margin?</h3>

The weighted-average contribution margin shows the average amount that a group of products or services contribute to meet the fixed costs.

The weighted-average contribution margin can be computed as Aggregate sales - Aggregate variable expenses) ÷ Number of units sold.

<h3>Data and Calculations:</h3>

Aggregate sales revenue = $1,800,000

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Aggregate contribution margin = $675,000 ($1,800,000 - $1,125,000)

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Thus, the calculation of a revised break-even point in units for the firm as a whole, using the weighted-average contribution margin approach is 1,155,556 units.

Learn more about break-even analysis at brainly.com/question/21137380

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Zhang Company reported Cost of goods sold of $835,000, beginning Inventory of $37,200 and ending Inventory of $46,300. The avera
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