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LuckyWell [14K]
3 years ago
12

Aerotron Electronics has just bought a used delivery truck for $15,000. The small business paid $1,000 down and financed the res

t, with the agreement to pay nothing for the entire first year and then to pay $526.83 at the end of each month over years 2, 3, and 4 (first payment is in 13th month). a. What nominal interest rate is Aerotron paying on the loan
Business
1 answer:
dimaraw [331]3 years ago
7 0

Answer:

Nominal interest rate =  12.23%

Explanation:

Given - Aerotron Electronics has just bought a used delivery truck for

            $15,000. The small business paid $1,000 down and financed the  

             rest, with the agreement to pay nothing for the entire first year and  

             then to pay $526.83 at the end of each month over years 2, 3, and

             4 (first payment is in 13th month).

To find - a. What nominal interest rate is Aerotron paying on the loan.

Proof -

As given ,

Price - $15,000

Down Payment - $1,000

⇒Loan Payment = $15,000 - $1,000

As given,

He will not pay for the entire first year. After that he will pay $526.83 for next 3 years.

Now,

Interest rate for 1 month = r %

So,

Loan after 1 year = 14,000( 1 + r)¹²

And

Annuity factor = \frac{1}{r} - \frac{1}{r}. \frac{1}{(1+r)^{t} }

and t = 3 years = 36 months

Now,

As we know,

Monthly loan payment = \frac{Loan amount}{Annuity factor}

⇒$526.83 = 14,000( 1 + r)¹² / \frac{1}{r} - \frac{1}{r}. \frac{1}{(1+r)^{t} }

By solving we get

r = 1.019%

Now,

Nominal interest rate = 1.019%×12 = 12.23%

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When underapplied or overapplied manufacturing overhead is prorated, amounts can be assigned to which of the following accounts?
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Explanation:

Whenever manufacturing overheads are prorated and under-applied or over-applied, then they are charged to inventory or cost which includes overheads as part of it.

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A government's Statement of Revenues, Expenditures, and Changes in Fund Balances reported proceeds of bonds in the amount of $2,
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Answer:

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Explanation:

The change in net position  = Amount of bond proceeds - Amount of bond principal.

The change in net position = $2,000,000 - $500,000 = 1,500,000

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Carter Corporation made sales of $ 825 million during 2018. Of this​ amount, Carter collected cash for $ 710 million. The​ compa
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Answer:

Part (a) The net income of carter is $115 million.

Part (b) The closing cash balance at the end of year is $360.

Explanation:

Part (a) Net Income Computation:

Sales                                     $825

Cost of goods sold             <u>(</u><u>$290</u><u>)</u>

Gross Profit                          $535

Other Expenses                  <u>(</u><u>$425</u><u>)</u>

Net income                          $115 Million

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Opening Cash position               $290

Collection from Sales                  $710

Inventory Invoices paid              ($350)

For  Everything                           <u>($290)</u>

Closing Cash balance                 $360

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