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TiliK225 [7]
2 years ago
13

Bethany needs to borrow $8,000. She can borrow money at 6.9% simple interest for 3 yr or she can borrow at 6.5% with interest co

mpounded continuously for 3 yr. Which option results in less total interest
Business
1 answer:
Evgesh-ka [11]2 years ago
4 0

The loan options which would result in less total interest is borrowing money at 6.9% simple interest.

<u>Given the following data:</u>

  • Principal, P = $8,000.
  • Interest rate, R = 6.9%
  • Time, T = 3 years
  • Interest rate 2 = 6.5%

To determine which of the loan options would result in less total interest:

<u>For </u><u>simple interest</u><u>:</u>

Mathematically, simple interest is given by the formula:

S.I = \frac{PRT}{100}\\\\S.I = \frac{8000 \times 6.9 \times 3}{100}\\\\S.I = 80 \times 6.9 \times 3

S.I = $1,656.

<u>For </u><u>compound interest</u><u>:</u>

Mathematically, an interest that is compounded continuously given by the formula:

A = Pe^{rt}\\\\A = 8000 \times e^{0.065 \times 3}\\\\A = 8000 \times e^{0.195}\\\\A = 8000 \times 1.2153

A = $9,722.49

Interest = A -P\\\\Interest = 9722.49-8000

Interest = $1,722.49

Read more on simple interest here: brainly.com/question/16992474

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If Firm 2 does not advertise, Firm 1 should advertise

If Firm 2 advertises, then Firm 1 should also advertise

Firm 1 dominant strategy is to advertise

Firm 2 dominant strategy is to advertise

1. A. Nash equilibrium is for both Firms to advertise.

Explanation:

Nash equilibrium is a state where interactions by different firms in a matrix is involved. No firm can gain by a unilateral change of strategy if other firm does not changes its strategy. It is a situation where there is optimal when there is no deviation from the initial strategy. Here firm 1 can by advertise and Firm 2 can also optimize by advertising.

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• What is a “Vocational qualification”? .​
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Read 2 more answers
A 13-year bond of a firm in severe financial distress has a coupon rate of 10% and sells for $930. The firm is currently renegot
adoni [48]

Answer:

Stated yield is 11.04%

expected yield is  5.78%

Explanation:

The expected yield to maturity can be computed using the rate formula in excel which is given below:

=rate(nper,pmt,-pv,fv)

nper is the number of coupon interest the bond would pay which is 13

pmt is the amount of coupon interest the bond pays which is $1000*10%=$100

pv is the current price of the bond which is $930

fv is the face value of $1000

=rate(13,100,-930,1000)=11.04%

However the expected yield has the coupon interest reduced to one -half as calculated below:

=rate(13,100*0.5,-930,1000)=5.78%

3 0
3 years ago
On January 1, the first day of its fiscal year, Pretender Company issued $12,700,000 of five-year, 11% bonds to finance its oper
yarga [219]

Answer:

1) Debit Bank $11787069 Debit bond discount $912931 ; Credit Bond $12700000

2) Debit Interest expense $751293 ; Credit Bank $660,000 Credit Discount on Bond payable $91293

3 )Debit interest expense $ 751293 ; Credit bank 660000, Credit discount on bond payable $91293

b)Interest expense = $1502586

c)It is because a financial crisis might have happened prior to issuing the bond and the company still went ahead with issuing even though the rate has changed.

Explanation:

interest expense = 12000000 * 0.11 * 6/12=$660000

discount on bond payable = $912931 /5 = 182586 /2= 91293

Interest expense = $751293 * 2 = $1502586

7 0
3 years ago
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