Question

A.) Suppose that South Pangean debt is $100 million and the interest rate it pays on that debt is 4 percent. That means its interest payments must be $ million.
b.) If South Pangean expenditures are $30 million without interest payments, that means its expenditures with interest payments are $ million.

Answer 1

Answer:

a

$4 million

b.

expenditures with interest payments

Explanation:

a.

The interest payment is the value of debt taken multiplied by the interest rate on the debt.

In other words, the interest payment is computed using the below formula:

annual interest payment=value of debt*interest rate

value of debt=$100 million

interest rate=4%

annual interest payment=$100 million*4%

annual interest payment=$4 million

b.

The expenditures with interest payments are is the expenditures without interest payments plus interest payments determined as $4million above

expenditures with interest payments=expenditures without interest payments+interest payments

expenditures without interest payments=$30 million

interest payments=$4 million

expenditures with interest payments=$30million+$4million

expenditures with interest payments=$34million