Answer:
The borrower is best off in situation <u>"a"</u> and the lender is best off in situation ▼ "C" .
Explanation:
Considering all the situations given in the options, the <u>borrower</u> is best in situation <u>a</u> and <u>lender</u> is best off in situation in <u>c</u>.
<u>Part a </u>
Real Interest rate = Nominal Interest rate - Inflation rate = 14 - 17 = -3 per cent. Thus, the purchasing power of money has fallen and the person has to pay back money with little purchasing power as compared to the value of the purchasing power at the time he borrowed money. Thus, borrowers are best off.Thus, <u>borrower</u> is best off when the inflation rate is very high.
<u>Part c</u>
Inflation rate is negative, thus the purchasing power of money will increase and lenders will get back money with higher purchasing power as compared to the value of the purchasing power of money at the time he lend the money. Thus, <u>lender </u>is best off when inflation rate is lowest.
Explanation:
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Answer:
Y = $391.10
Explanation:
We have 0.125<em>B</em>(n-1) = i
B(n-1) = In = 142.78
So that B(n-1) = 142.78/0.125 = 1142.24
Furthermore, B(n-1) = <em>Px = Pv </em>= P/(1+0.125) = 1142.24
P/1.125 = 1142.24
P = 1142.24*1.125
P = 1285.02.
The total amount of the loan = Principal repaid as of time (n-1) + Principal repaid in last payment
= 6009.12 + 1142.24
= 7151.36
So, the total amount of the loan is 7151.36.
The principal repaid in the first payment Y = 1285.02 - 0.125*7151.36
Y = 1285.02 - 893.92
Y = $391.10
The appropriate journal entry is:Debit Cash $1313; debit Sales Discount $39; credit Accounts Receivable $1352.
<h3>Journal entry</h3>
Based on the information given the correct entry to record this transaction is:
Debit Cash $1313
{$1300+[($1300×4%)-($1300×3%)]}
[$1300+($52-$39)]
Debit Sales Discount $39
($1300×3%)
Credit Accounts Receivable $1352
[$1300 + ($1300×4%)]
Inconclusion the appropriate journal entry is:Debit Cash $1313; debit Sales Discount $39; credit Accounts Receivable $1352.
Learn more about journal entry here:brainly.com/question/9701045
