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taurus [48]
3 years ago
12

Sauer Food Company has decided to buy a new computer system with an expected life of three years. The cost is $300,000. The comp

any can borrow $300,000 for three years at 12 percent annual interest or for one year at 10 percent annual interest. Assume interest is paid in full at the end of each year.
Required:
a. How much would Sauer Food Company save in interest over the three-year life of the computer system if the one-year loan is utilized and the loan is rolled over (reborrowed) each year at the same 8 percent rate?
b. Compare this to the 10 percent three-year loan. What if interest rates on the 8 percent loan go up to 13 percent in year 2 and 18 percent in year 3?
c. What would the total interest cost compared to the 10 percent, three-year loan?
Business
1 answer:
pychu [463]3 years ago
3 0

Answer:

 

Explanation:

From the given information;

Suppose the interest rate is constant. then at 10% three-year loan;

The total interest at 10% will be:

= $300000 × 10% × 3years

= $90000

Aso, 8% one year loan with rollover will be total interest at 8%:

= $300000 × 8% × 3 years

= $72000

Savings in interest of Sauer Food Company = $(90000 - 72000)

= $18000

Suppose short-term rates change, then for the first year, we will have:

= 300000 × 0.1

=  $30000

second year will be = 300000 × 0.13

=$39000

third year will be= 300000 × 0.18

=$54000

As such, the total rate of the variable loan = $30000 + $39000 + $54000

= $123000

However, the fixed rate at 10% three year loan is equal to = $90000

As such, the additional total interest cost  = $(123000 - 90000)

= $33000

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Answer: $256

Explanation:

Using time and materials pricing, the total price for a job requiring 3 direct labor hours and $54 of materials will be calculated as:

Materials = $54

Add: Materials markup = 30% × $54 = 0.3 × $54 = $16.2 = $16

Add: Labour = 3 × $62 = $186

Total price of job = $256

7 0
2 years ago
What trait are narcissists likely to have that is associated with leader emergence but not effectiveness?
Evgen [1.6K]

Answer:

c. high creativity

Explanation:

Narcissistic personality disorder is characterized by the behavior of an individual who has a great need to feel admired, this individual has a mental disorder that leads him to have an exacerbated perception of himself and his characteristics, having a vanity and a sense of very strong self-importance.

The characteristic that narcissists probably have and is associated with the emergence of the leader, but not effectiveness, may be high creativity, as such individuals can be creative in the sense of self-valuing themselves and their personal achievements, leading to even making up stories to feel valued, while the creativity present in a leader is focused on a vision of the business and management of a company and people, so it is correct to say that a leader's creativity aims to make business more efficient and improve working conditions of its employees.

7 0
2 years ago
A company is targeting consumers who have not purchased its products for several months. It is segmenting the consumer market ba
Nina [5.8K]

Answer:

Usage Rate.

Explanation:

A company is targeting consumers who have not purchased its products for several months. It is segmenting the consumer market based on usage rate. It is one of the type of behavioral segmentation where markets are segmented on the basis of consumers knowledge, response towards product, usage rate and attitude. Marketers divide the markets into nonusers, ex-users, potential users, first time users and regular users in order to target them accordingly.

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2 years ago
Ponzi Corporation has bonds on the market with 14.5 years to maturity, a YTM of 6.1 percent, and a current price of $1,038. The
Dmitriy789 [7]

Answer:

Coupon rate is 6.5%

Explanation:

Bond price is the sum of present value of coupon payment and face value of the bond. If the price is available the coupon payment can be calculated by following formula

Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]

$1,038 = C x [ ( 1 - ( 1 + 6.1%/2 )^-14.5x2 ) / 6.1%/2 ] + [ $1,000 / ( 1 + 6.1%/2 )^14.5x2 ]

$1,038 = C x [ ( 1 - ( 1 + 0.0305 )^-29 ) / 0.0305 ] + [ $1,000 / ( 1 + 0.0305 )^29 ]

$1,038 = C x [ ( 1 - ( 1.0305 )^-29 ) / 0.0305 ] + [ $1,000 / ( 1..0305 )^29 ]

$1,038 = C x [ ( 1 - ( 1.0305 )^-29 ) / 0..0305 ] + [ $1,000 / ( 1.0305 )^29 ]

$1,038 = C x 19.068 + $418.42

$1,038 - $418.42 = C x 19.068

$619.58 = C x 19.068

C = $619.58 / 19.068

C = $32.49

Coupon rate = 32.49 / $1,000 = 3.25% semiannual

Coupon rate = 3.25% per semiannual x 2 = 6.5% per year

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Oksana_A [137]
You got a utility..........
6 0
3 years ago
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