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julia-pushkina [17]
3 years ago
14

4. Tom Busby owes $20,000 now. A lender will carry the debt for four more years at 8 percent interest. That is, in this particul

ar case, the amount owed will go up by 8 percent per year for four years. The lender then will require Busby to pay off the loan over 12 years at 11 percent interest. What will his annual payment be
Business
1 answer:
bezimeni [28]3 years ago
8 0

Answer:

Tom Busby

His annual payment will be:

= $4,091.64

Explanation:

a) Data:

Loan = $20,000

Interest on loan for 4 years = 8% per annum

Amount of loan after 4 years = $27,200 ($20,000 * 1.360)

Payment period = 12 years

Interest rate during payment period = 11%

b) From online finance calculator:

You will need to pay $4,091 every year for 12 years to payoff the debt at 11% interest.

Monthly Payment $340.97

Annual Payment  $4,091.64

Time Required to Clear Debt 12.00 years

Total of 144 or 12 Payments = $49,099.25

Total Interest $21,899.25

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19.27+88.22+321.77=429.26

4.5+2=6.5

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5 0
3 years ago
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Harris Company uses the allowance method of handling its credit losses. It estimates credit losses at one percent of credit sale
likoan [24]

Answer:

Dec.31           Bad Debts Expense    27000

December 31    Balance Sheet Accounts Receivable             392400

Explanation:

Harris Company

Credit Sales for the current year $2700,000

Credit Losses = 1% of $ 2700,000= $ 27000

Add Allowance for Doubtful Accounts $ 30600 Cr

Required Adjustments          $ 57,600 Cr

General Journal

Date                     Description            Debit                Credit

Dec.31           Bad Debts Expense    27000

                         Allowance for Doubtful Accounts   27000

December 31 Balance Sheet.

                       Accounts Receivable      $450,000        

Less: Allowance for Doubtful Accounts $57,600 ( 27000+ 30,600)

                      Accounts Receivable             392400

6 0
3 years ago
Jay is an 21 year old college senior. He reads on a financial blog that interest rates are being lowered by the Federal Reserve.
IceJOKER [234]

Answer:

A.

Explanation:

6 0
3 years ago
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you own 100 shares in each of three companies, each company pays a dividend. gillete pays 1.15 per share in dividends, general e
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Answer:

$278

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$278

Hope this helps

3 0
3 years ago
You need to accumulate $10,000. To do so, you plan to make deposits of $1,000 per year - with the first payment being made a yea
evablogger [386]

Answer:

It will take 6.68 years to reach the $10,000 goal.

Explanation:

As the deposit of $1,000 per year is a form of the annuity payment.

We will use the following formula in order to calculate the numbers of year required to reach the goal

Future value of Annuity = Annuity payment x ( ( ( 1 + interest rate )^numbers of years ) - 1 ) / Interest rate

Where

Future value of Annuity = Target amount = $10,000

Annuity payment = Yearly deposti = $1,000

Interest rate = 14%

Numbers of years = n = ?

Placing values in the formula

Future value of Annuity = Annuity payment x ( ( ( 1 + interest rate )^numbers of years ) - 1 ) / Interest rate

$10,000 = $1,000 x ( ( ( 1 + 14% )^n ) - 1 ) /14%

$10,000 x 14% = $1,000 x ( ( ( 1.14 )^n ) - 1)

$1,400 = $1,000 x ( ( ( 1.14 )^n ) - 1)

$1,400 / $1,000 = ( ( 1.14 )^n ) - 1

1.4 = ( ( 1.14 )^n ) - 1

1.4 + 1 = 1.14^n

2.4 = 1.14^n

Log 2.4 = n x Log 1.14

n = Log 2.4 / Log 1.14

n = 6.681525965

n = 6.68 years

It will take 6.68 years to reach the $10,000 goal.

7 0
3 years ago
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