Answer:
a. 5.819 million
b. $709918
Explanation:
Below is the calculation:
a. Total number of adult population = 253 million
Total employed adult = 253 x 59.7% = 151.041
Number of employed adult after increase in employment rate = 253 x 62% = 156.86
More people would be working = 156.86 - 151.041 = 5.819 million
b. GDP per capita is $122,000, so increase in GDP = 5.819 x 122000
Increase in GDP = $709918
Dandy Candy bought a delivery vehicle for $45,000 by issuing an 8% installment note on January 1, 2021. Dandy will make 12 monthly payments of $3,914.50 at the end of each month.
Cash Reduction of Note
Period Payment Interest Exp Note Payable Payable
(Credit) (Debit) (Debit) Balance
At issue --- --- --- $45,000.00
01/31/21 $3,914.50 $300.00 $3,614.50 41,385.50
02/28/21 3,914.50 ? ? ?
03/31/21 3,914.50 ? ? ?
04/30/21 3,914.50 ? ? ?
05/31/21 3,914.50 ? 3,711.85 26,684.93
Required:
Using the partially completed amortization table above, prepare the journal entries for the end of March and the end of April.
Answer:
Dandy Candy
Journal Entries for the end of March and April:
03/31/21 Debit Note Payable $3,662.85
Debit Interest Expense $251.65
Credit Cash $3,914.50
To record payment of interest and note payable on March 31, 2021.
04/30/21 Debit Note Payable $3,687.27
Debit Interest Expense $227.23
Credit Cash $3,914.50
To record payment of interest and note payable on April 30, 2021.
Explanation:
a) Data and Calculations:
Cost of delivery vehicle = $45,000
Note Payable = $45,000
Interest rate on note = 8%
Date of issue of note = January 1, 2021
Monthly payments required = $3,914.50 for 12 months
Amortization Table
Cash Reduction of Note
Period Payment Interest Exp Note Payable Payable
(Credit) (Debit) (Debit) Balance
At issue --- --- --- $45,000.00
01/31/21 $3,914.50 $300.00 $3,614.50 41,385.50
02/28/21 3,914.50 ? ? ?
03/31/21 3,914.50 ? ? ?
04/30/21 3,914.50 ? ? ?
05/31/21 3,914.50 ? 3,711.85 26,684.93
Amortization Table
Cash Reduction of Note
Period Payment Interest Exp Note Payable Payable
(Credit) (Debit) (Debit) Balance
At issue --- --- --- $45,000.00
01/31/21 $3,914.50 $300.00 $3,614.50 41,385.50
02/28/21 3,914.50 275.90 3,638.50 37,746.90
03/31/21 3,914.50 251.65 3,662.85 34,084.05
04/30/21 3,914.50 227.23 3,687.27 30,396.78
05/31/21 3,914.50 202.65 3,711.85 26,684.93
Kramer and Knox began a partnership by investing $58,000 and $65,000, respectively. During its first year, the partnership earned $160,000. Prepare calculations showing how the $160,000 income should be allocated to the partners under each of the following three separate plans for sharing income and loss:(1) The partners failed to agree on a method to share income.(2) The partners agreed to share income and loss in proportion to their initial investments. (Do not round intermediate calculations.(3) The partners agreed to share income by granting a $56,500 per year salary allowance to Kramer, a $46,500 per year salary allowance to Knox, 12% interest on their initial capital investments.
Answer and Explanation:
The computation is shown below:
1. At the time when the partner failed to share the incom and loss so it is assume that the net income i.e. $160,000 should be shared equally so for both it is $80,000 each
2. When the income is shared as per their initial investment
Particulars Kramer Knox Total
Investment $58,000 $65,000 $123,000
Investment ratio 47.15% 52.85%
$160,000 income share $75,440 $84,560 $160,000
3. Sharing of the income as per the defined rule
Particulars Kramer Knox Total
Salary allocated $56,500 $46,500 $103,000
Interest at 12% $6,960 $7,800 $14,760
Remaining balance $21,120 $21,120 $42,240
Total $84,580 $75,420 $160,000
Output from a process contains 0.02 defective units. Defective units that go undetected into final assemblies cost $25 each to replace. An inspection process, which would detect and remove all defectives, can be established to test these units. However, the inspector, who van test 20 units per hour, is paid $8 per hour, including fringe benefits. Should an inspection station be established to test all units
Answer: Inspection station should be established.
Explanation:
Cost to company if defect is not detected:
= Cost to replace * percentage defects * number of units tested per hour
= 25 * 0.02 * 20 units
= $10 per hour
Inspector is paid $8 per hour.
The fees to the inspector are less than the cost of replacement so the Inspection station should be established as it saves costs.
what is goal formulation?? explain the goal formulation process
Answer:
Goal formation is a process of how a goal is initiated or added to, while goal displacement is a process whereby goals are shifted out, changed, toned down or removed from the original set.
Suppose the production of long-distance airline flights is described by a fixed proportion production process in which three crew members (i.e., labor) are required for each aircraft (i.e., capital). If the airline operates with four crew members per plane, then we know that:
Answer:
production at this point is technically inefficient.
Explanation:
Efficient production processes requires a producer to either minimise the inputs they are using at a given output or maximise output level at a given input level.
Technical inefficiency is when input is not minimised or output maximised.
In the given instance the fixed cost (airplane) remains unchanged. However crew members can be variable.
If the airplane only requires 3 crew members and 4 crew members are now used, the company is not minimising inputs used so they are technically inefficient.
Xây dựng quá trình nghiệp vụ mua và giao nhận áp tải một lô hàng cụ thể theo dữ liệu sau
Đúng 8h ngày 30/5 nhân viên nghiệp vụ đến tổng kho KH A để mua hàng doanh nghiệp không có phương tiện vận chuyển và hàng mua phải thanh toán bằng tiền mặt. Trong hoá đơn có gì những mặt hàng sau đây
Xà phòng bột VISO 500kg đống thành 1000 gói mỗi gói 500g giá 4000đ/gói
Vải chéo hoa con công Trung Quốc khổ 80cm tổng số 2400m tổng thành 40 cuộn 1 cuộn 60m giá 5000đ/m
Bộ đồ mùa hè người lớn 100 bộ giá 20.000đ/ bộ
Đường kính trắng vạn điểm 02 tấn đóng trong 40 bao 1 bảo 50kg giá 6000đ/kg
Là nhân viên nghiệp vụ hãy mua và giao nhận lô hàng trên
Answer:
Quản lý chuỗi cung ứng là quá trình quản lý sự di chuyển của nguyên vật liệu thô và các bộ phận từ khi bắt đầu sản xuất cho đến khi giao hàng đến tay người tiêu dùng. Trong nhiều tổ chức, các quyết định về chuỗi cung ứng vận hành được đưa ra hàng trăm lần mỗi ngày ảnh hưởng đến cách sản phẩm được phát triển, sản xuất, di chuyển và bán. Mức độ phức tạp của chuỗi cung ứng thay đổi theo quy mô của doanh nghiệp cũng như mức độ phức tạp và số lượng của các mặt hàng được sản xuất, nhưng hầu hết các chuỗi cung ứng đều có các yếu tố chung, chẳng hạn như sau
Explanation:
Làm ơn đi
Which of the following is true of public goods? Question 9 options: a) The market mechanism helps to signal the quantity that is demanded by the public. b) The public sector is guided to produce the correct quantity by market prices. c) Consumption by one person does not preclude consumption of the same good by another person. d) Payment for consumption is efficiently provided by market prices.
Answer:
c
Explanation:
A public good is a good that is non excludable and non rivalrous.
For example, if there is a statue in a park, Everyone has assess to the statue and because one person is enjoying the view of the statue does not means another person cannot enjoy the view of the statue
Flexible budgets Group of answer choices are static budgets that have been revised for changes in price(s). accommodate changes in activity levels. accommodate changes in the inflation rate. are used to evaluate capacity utilization.
Answer: accommodate changes in activity levels.
Explanation:
A flexible budget is refered to as the budget which changes based on the actual activity. It accommodate changes in activity levels.
It is the budget which is allowed to be adjusted as a result of the change in the assumptions that's used in the creation of the budget during the planning process of the management.
Answer:
accommodate changes in activity levels. is the correct choice.
Explanation:
Flexible budgets Group of answer accommodate changes in activity levels.
Journalize the entries to record the following transactions for Mountain Realty Inc.:
Aug.26 Issued for cash 128,000 shares of no-par common stock The stock outstanding when a corporation has issued only one class of stock. (with a stated value of $5) at $6.
Oct.1 Issued at par value 41,000 shares of preferred 1% stock, $10 par The monetary amount printed on a stock certificate. for cash.
Nov. 30 Issued for cash 17,000 shares of preferred 1% stock, $10 par at $11
Answer and Explanation:
The journal entries are shown below"
On Aug 26
Cash Dr $768,000
To Common stock $640,000
To Additional paid in capital $128,000
(Being issuance of the common stock is recorded)
On Oct 1
Cash Dr $410,000
To preferred stock $410,000
(Being the issuance of the preferred stock is recorded)
On Nov 30
Cash Dr $187,000
To Common stock $170,000
To Additional paid in capital $17,000
(Being issuance of the common stock is recorded)
If demand increases and supply stays the same, price will be………
Answer:
If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.
Explanation:
If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price. If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price. If demand remains unchanged and supply increases, a surplus occurs, leading to a lower equilibrium price.
Answer:
If demand increases and supply stays the same then equilibrium quantity goes up, and equilibrium price goes up. If demand decreases and supply increases then equilibrium quantity could go up, down, or stay the same, and equilibrium price will go down
Explanation:
The Financial Accounting Standards Board (FASB) is the body authorized to establish accounting principles for all colleges and universities and health care entities.
a. True
b. False
Answer:
The given statement is "False".
Explanation:
The agency or institution including all businesses, profit-oriented accept or reject, once again to create accountability guidelines, is determined as FASB.These are predicated on the notion that sometimes business, as well as the profession of investment products, function efficiently when there is trustworthy, succinct, as well as straightforward contact reporting.Thus the above is the correct answer.
Project Management Practice ProblemBragg’s Bakery is building a new automated bakery downtown Sandusky. Here are the activities that need to be completed to get the new bakery built and the equipment installed.
ACTIVITYPREDECESSORNORMAL TIME (WEEK)CRASH TIME (WEEK)EXPEDITING COST/WEEKA-963000BA853500CA15104000DB,C532000EC1062500FD,E215000
Hint: I have directly provided the crashing cost per unit time.
a. What is the normal project length?
b. What is the critical path in this project?
c. Which activity will you choose to crash first to reduce the duration of the project by one week?
d. What is the project length if all activities are crashed to their minimum?
e. What is the slack for activity D?
Answer:
a. The normal project length is 36 weeks.
b. The critical path in this project is A-C-E-F.
c. The activity that you choose to crash first to reduce the duration of the project by one week is E because it has the least expediting cost/week amongst A, C, E, F.
d. The project length if all activities are crashed to their minimum is 23 weeks.
e. The slack for activity D is 5 weeks.
Explanation:
a) The normal length of the project = completion time of last activity = 36 weeks.
b) The criteria for critical activity:
[tex]LC_{i} = ES_{i} ,\\LC_{j} = ES_{j} ,\\[/tex]
[tex]ES_j - ES_i = LF_j - LF_{i} =[/tex] duration of the activity
where ES = Earliest start time, EF = Earliest finish time , LC = latest completion time, LF = latest finish time ,
The suffix- i refers to the preceding node, suffix-j refers to the succeeding node.
activities satisfying above all criteria are A, C, E, F
therefore critical path is A-C-E-F.
c) To reduce the project duration by 1 week. we should choose to crash among critical activities A, C, E, F. thus we choose to crash activity E because it has the least expediting cost/week amongst A, C, E, F.
d) if we crash all the activities to their minimum, then the project length = sum of crash time of all critical activities
= [6 + 10 + 6 + 1]
= 23 weeks.
e) The slack of activity d = LS - ES = 34 - 29
= 5 weeks
The critical path is given in the diagram,
Olinick Corporation is considering a project that would require an investment of $343,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows (Ignore income taxes.): Sales $ 227,000 Variable expenses 52,000 Contribution margin 175,000 Fixed expenses: Salaries 27,000 Rents 41,000 Depreciation 40,000 Total fixed expenses 108,000 Net operating income $ 67,000 The scrap value of the project's assets at the end of the project would be $23,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:
Answer:
3.21 years
Explanation:
Annual net cash-flow = Operating net income + Depreciation
Annual net cash-flow = $67,000 + $40,000
Annual net cash-flow = $107,000
Payback period = Investment / Annual net cash-flow
Payback period = $343,000/$107,000
Payback period = 3.205607476635514
Payback period = 3.21 years.
So, he payback period of the project is closest to 3.21 years.
An individual works downtown and pays $600 per month in rent for an apartment located 10 miles from her office. She has calculated that she spends 30 minutes per day driving each way to the office and it costs her $4 per day in gas and lost productivity. Using the framework of the bid-rent model, how much would she be willing to pay for an apartment downtown, assuming a 20 workday month?
a. $440.
b. $680.
c. $520.
d. $80.
Answer:
b. $680
Explanation:
Calculation to determine how much would she be willing to pay for an apartment downtown, assuming a 20 workday month
First step to determine the Cost of commuting using this formula
Cost of commuting = Cost of gas and productivity × 20 workday month
Let plug in the formula
Cost of commuting =$4*20
Cost of commuting =$80
Now let determine how much would she be willing to pay for an apartment
Using this formula
Amount willing to pay= Total rent + Cost of commuting
Let plug in the formula
Amount willing to pay= $600 + $80
Amount willing to pay= $680
Therefore how much would she be willing to pay for an apartment downtown, assuming a 20 workday month is $680
Trong ngành công nghiệp thì doanh nghiệp đã dùng tiêu thức nào để phân khúc thị trường
Answer:
which language is this???
You bought Sumsung stock for $50 on April 1. The stock paid a dividend of $5 on July 1, and had a price of $53. It is now Oct. 1, and the stock price is $52. Treasury bills yield 1%.
Required:
a. What was the arithmetic average quarterly return?
b. What was the standard deviation of quarterly returns?
Answer:
a. 7.05%
b. 12.7%
Explanation:
a. The returns are:
First return July 1 = (Current price - Previous price + Dividend) / Cost price
= (53 - 50 + 5) / 50
= 16%
Second return Oct 1 = (52 - 53) / 53
= -1.9%
Arithmetic mean = (16 + (-1.9%)) / 2
= 7.05%
b. Variance = ((16% - 7.05%)² + (-1.9% - 7.05%)²)
= 160.205%
Standard deviation = √160.205
= 12.7%
what is consumer surplus
Your total lottery winnings are actually worth ______________ more than the same amount as less than $20,000 to you today.
Answer:
Your total lottery winnings are actually worth __$10,000____________ more than the same amount as less than $20,000 to you today.
Explanation:
My total worth today is $ 10,000
My present worth today is less than $20,000 by $10,000
Hence, the lottery amount is more than by amount X which is equal to the difference between $20,000 and My total worth in present times
$20,000 - $10,000 = $10,000
The Corbit Corp, sold merchandise for $10,000 cash. The cost of orp. sold merchandise for $10,000 cash. The cost of the se sold was $7,590. The journal entries to record this transaction under the perpetual inventory system would be:______.
A. Cash 10,000 Merchandise Inventory Cost of Merchandise Sold 10,000 7,590 7,590 Sales
B. Cash 10,000 Sales 10,000 Cost of Merchandise Sold 7,590 7,590 Merchandise Inventory
C. Cash 10,000 Sales 10,000 Merchandise Inventory Cost of Merchandise Sold 10,000 10,000
D. Cash 7,590 Sales 7,590 Cost of Merchandise Sold Merchandise Inventory 7,590 7,590
Answer:
B. Cash 10,000 Sales 10,000 Cost of Merchandise Sold 7,590 7,590 Merchandise Inventory
Explanation:
The journal entry is shown below:
cash $10,000
To sales $10,000
(being cash receipts is recorded)
Here cash is debited as it increased the assets and credited the sales as it also increased the revenue
cost of merchandize sold $7,590
To merchandize inventory $7,590
(being cost of merchandise sold is recorded)
Here cost is debited as it increased the expense and credited the merchanidse inventory as it decreased the inventory
Park Corporation is planning to issue bonds with a face value of $790,000 and a coupon rate of 7.5 percent. The bonds mature in 6 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective-interest amortization method and also uses a discount account. Assume an annual market rate of interest of 8.5 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.)Required: 1. Prepare the journal entry to record the issuance of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)2. Prepare the journal entry to record the interest payment on June 30 of this year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)3. What bond payable amount will Park report on its June 30 balance sheet? (Enter all amounts with a positive sign.)
Answer:
Journal Entry to record issuance of bond:-
First of all, we need to calculate the issue price of the bonds.
Semi Annual Stated Coupon Interest = face Value 790,000 x Coupon Rate 7.5% * 1/2half yearly = $29,625
Semiannual period to maturity (n) = 6 years x 2 = 12
Semi Annual Market Interest Rate (R) = 8.5%*1/2 = 4.25%
Present Value of Bonds (Price of the bonds issued) = Semi-Annual Coupon Interest x PVIFA (R, n) + Face Value x PVIF (R, n)
= (29,625*9.25039) + (790,000*0.60686)
= 274,042.80 + 479,419.40
= $753,462
Calculation of Present Value Factor:-
PVIFA (R, n) = Present Value interest factor for ordinary annuity at R% for n periods = (1 – 1/(1+R)n) / R
PVIFA (4.25%, 12) = (1 – 1/(1+0.0425)12) / 0.0425 = 9.25039
PVIF (R, n) = Present Value interest factor for ‘n’ period at ‘R’% = 1/(1+R)n
PVIF (4.25%, 12) = 1/(1+0.0425)12= 0.60686
Explanation:
issued $400,000 of 10-year bonds at a discount. Prior to maturity, when the carrying value of the bonds was $388,000, the company redeemed the bonds at 99. Prepare the entry to record the redemption of the bonds.
Answer:
Dr Bonds Payable $400,000
Dr Loss on retirement of bonds $12,000
Cr Cash $396,000
Cr Discount on bonds $16,000
Explanation:
Preparation of the journal entry to record the redemption of the bonds.
Dr Bonds Payable $400,000
Dr Loss on retirement of bonds $12,000
($400,000-$388,000)
Cr Cash $396,000
($400,000 *99% = $396,000)
Cr Discount on bonds $16,000
($400,000+$12,000-$396,000)
(To record the redemption of the bonds)
What are the three main goals of monetary policy?
Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage, assuming that the residual value of the fixed asset is to be ignored: (a) 4 years, (b) 8 years, (c) 10 years, (d) 16 years, (e) 25 years, (f) 40 years, (g) 50 years. If required, round your answers to two decimal places.
Based on recent statistics, which of the following individuals would have the lowest probability of being unemployed?
a. a 45-year-old white male.
b. a 50-year-old white female.
c. a 32-year-old African American female.
d. a 19-year-old African American male.
e. a 17-year-old white female.
Answer:
a. a 45-year-old white male.
Explanation:
Middle aged white males have the lowest unemployment rate in the United States. Employment ratios for white and asian men are approximately the same, 72.8%, which is higher than any other demographic group. Besides the normal prejudices that exist in society, these two groups also have the highest average education level (i.e. more college years)
Zoey Bella Company has a payroll of $6,200 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. Journalize the adjusting entry required on December 31, assuming the year ends on a Thursday.
Answer:
Debit Salaries Expense $6,200
Credit Salaries Payable $6,200
Explanation:
Preparation of the adjusting entry required on December 31, assuming the year ends on a Thursday.
Based on the information given the appropriate
adjusting journal entry required on December 31, assuming the year ends on a Thursday will be :
December 31
Debit Salaries Expense $6,200
Credit Salaries Payable $6,200
what reasons would you give for the reaction of consumers to price changes
Explanation:
ayes
he's!Once the cells in a biological machine stop working, it can never be started again. It goes into a cascade of decay, falling toward disorder and randomness. Except in the case of viruses. They can turn off and go dead. Then, if they come in contact with a living system, they switch on and multiply. The only thing that "lived" inside this monkey was the unknown agent, and it was dead, for the time being. It was not multiplying or doing anything, since the monkey's cells were dead. But if the agent touched living cells, Nancy's cells, it would come alive and begin to amplify itself. In theory, it could amplify itself around the world in the human species.
Summary of central idea: It is petrifying that even if viruses are dead, they have the potential to "come alive.”
If the price of product L increases, then how will the demand curve for the close-substitute product J shift? If X is a normal good, will an increase in money income shift the supply or demand curve and in which direction?
Answer:
demand curve for product J would shift rightwards or outwards
If X is a normal good, an increase in income would shift the demand curve rightwards or outwards
Explanation:
Substitute goods are goods that can be used in place of another good.
If the price of product L increases, the quantity demanded of product L declines. this is line with the law of demand
According to the law of demand, the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.
Consumers would then shift to the consumption of the close substitute. As a result, there would be an increase in the demand for product J. This would lead to a rightward or outward shift of the demand curve for product J
Normal goods are goods that are goods whose demand increases when income increases and falls when income falls
Since X is a normal good, when income increases, the demand for good X increases. this would shift the demand curve outward
Tài liệu về NVL X tại 1 DN tính và nộp thuế GTGT theo phương pháp khấu trừ tháng 03/N
I. Tồn đầu kỳ: 8.000 m, đơn giá 15.000 đ/m
II. Trong tháng 3/N, NVL X biến động như sau:
1. Ngày 3/3: Xuất 6.000 m để sản xuất sản phẩm
2. Ngày 7/3: Thu mua nhập kho 5.000 m, giá mua ghi trên hoá đơn chưa thuế GTGT 10% phải trả Công ty K là 70.000.000đ. Chi phí vận chuyển, bốc dỡ chi bằng tiền mặt theo giá có cả thuế GTGT 10% là 770.000đ.
3. Ngày 10/3: Xuất 3.000m để góp vốn liên doanh dài hạn với Công ty Y.
4. Ngày 12/3: Dùng tiền vay ngắn hạn để mua 5.000 m nhập kho. Đơn giá mua chưa thuế GTGT là 14.600đ/m, thuế suất thuế GTGT 10%; chi phí vận chuyển phải trả cho Công ty M theo giá có thuế GTGT 5 % là 2.100.000đ.
5. Ngày 15/3: Xuất 6.000 m để sản xuất sản phẩm
6. Ngày 28/3: Mua của Công ty V 1.000m, đơn giá mua chưa thuế GTGT là 15.500đ/m, thuế suất thuế GTGT 10%. NVL đã nhập kho đủ. DN đã thanh toán bằng chuyển khoản.
Yêu cầu: Xác định giá thực tế NVL X nhập, xuất kho trong kỳ và tồn kho cuối kỳ theo các PP sau:
1. Phương pháp giá đơn vị bình quân cả kỳ dự trữ
2. Phương pháp giá đơn vị bình quân cuối kỳ trước
3. Phương pháp giá đơn vị bình quân sau mỗi lần nhập
4. Phương pháp Nhập trước, xuất trước (FIFO)
Answer::!;!,!’cldldkfnbbfndkdfkf
Explanation:
Fbxnbdndndnxnxfnnfncdk
Suppose that a firm is currently maximizing its short-run profit at an output of 50 units. If the current price is $9, the marginal cost of the 50th unit is $9, and the average total cost of producing 50 units is $4, what is the firm's profit
Answer:
$250
Explanation:
Profit = Total revenue - Total cost
Profit = ($9*50 units) - ($4*50 units)
Profit = $450 - $200
Profit = $250
Thus, the firm's profit will be $250.
Sanders Co. is planning to finance an expansion of its operations by borrowing $51,500. City Bank has agreed to loan Sanders the funds. Sanders has two repayment options: (1) to issue a note with the principal due in 10 years and with interest payable annually or (2) to issue a note to repay $5,150 of the principal each year along with the annual interest based on the unpaid principal balance. Assume the interest rate is 8 percent for each option.
Required:
a. What amount of interest will Sanders pay in Year 1 under option 1 and under option 2?
b. What amount of interest will Sanders pay in Year 2 under option 1 and under option 2?
Answer:
A. Year 1 Option 1 $4,120
Year 1 Option 2 $4,120
B. Year 2 Option 1 $4,120
Year 2 Option 2 $3,708
Explanation:
A. Calculation to determine What amount of interest will Sanders pay in Year 1 under option 1 and under option 2
Year 1:
Option 1 − annual interest only=$51,500 × 8%
Option 1 − annual interest only= $4,120
Option 2 − annual interest
Option 2 − annual interest =$51,500 × 8
Option 2 − annual interest = $4,120
Therefore amount of interest will Sanders pay in Year 1 under option 1 and under option 2 is :
Year 1 Option 1 $4,120
Year 1 Option 2 $4,120
B. Calculation to determine What amount of interest will Sanders pay in Year 2 under option 1 and under option 2
Year 2
Option 1 − annual interest only=$150,000 × 8%
Option 1 − annual interest only= $4,120
Option 2 − annual interest and $5,150 on principal:
Original principal $51,500
Less: Payment at end of year one ($5,150)
Balance of principal for year two $46,350
Option 2 − annual interest= $46,350 × 8%
Option 2 − annual interest= $3,708
Therefore amount of interest will Sanders pay in Year 2 under option 1 and under option 2 is :
Year 2 Option 1 $4,120
Year 2 Option 2 $3,708
