Answer:
a. It will take her 5 years to pay for her wardrobe
b. She should shop for a new card once she is done paying for this one.
c. She should shop for a new card after finishing paying for this card since going further into debt with the current card would be a bad idea. This is due to the fact that an annual interest rate of 16% is very high. The best option would therefor to finish her payments on the credit card, then shop for a new card with a lower annual interest rate.
Explanation:
Use the formula below to determine the number of months it would take Rachel to pay off her debt;
C *{1-(1+r)^(-n×t)}/(r/n)=PV
where;
C=annuity
r=annual interest rate
n=number of compounding periods in a year
t=number of years
PV=present value
In our case;
PV=$10,574
C=$260
r=16%=16/100=0.16
n=12
t=unknown
replacing;
260*{1-(1+0.16/12)^(-12×t)}/(0.16/12)=10,574
1-(1+0.16/12)^(-12×t)={10,574×(0.16/12)}/260
1-{1.013^(-12 t)}=0.542
(1-0.542)=1.013^(-12 t)
ln 0.458=-12 t (ln 1.013)
t=-ln 0.458/12×ln 1.013
t=5
It will take her 5 years to pay for her wardrobe
b. She should shop for a new card once she is done paying for this one.
c. She should shop for a new card after finishing paying for this card since going further into debt with the current card would be a bad idea. This is due to the fact that an annual interest rate of 16% is very high. The best option would therefor to finish her payments on the credit card, then shop for a new card with a lower annual interest rate.
Answer:
$328,700
Explanation:
The preparation of the Cash Flows from Operating Activities - Indirect Method is shown below:
Cash flow from Operating activities - Indirect method
Net income $317,500
Adjustment made:
Add : Depreciation expense $36,000
Less: Gain on disposal of equipment -$21,000
Less: Increase in accounts receivable -$5,600
Add: Decrease in inventory $3,200
Add: Decrease in prepaid insurance $1,200
Less: Decrease in account payable -$3,800
Add: Increase in income taxes payable $1,200
Net Cash flow from Operating activities $328,700
Answer:
the reserves of the bank are short by 1,000
Explanation:
it could loan up to 5,000 dollars
but because it make a new loan of 6,000
their reserves decreases by 6,000
5,000 - 6,000 = (1,000)
the reserves of the bank are now short by 1,000
the reserve ratio is not used in this calculations as the 6,000 dollar from the loan leave the bank once the check is cleared
I’m confused myself to so I’m not really sure ?!
