Answer: Higher return than CAPM
Explanation:
CAPM assumes that markets are liquid and that there are no transaction costs. This means that when it gives the expected return of a security, it does so without accounting for illiquidity.
If the security is therefore affected by illiquidity such that the price goes up in such a situation, CAPM would not have accounted for this which means that the expected return of the security should be higher than what CAPM predicts to cater for this price increase.
Weighted Average Cost Flow Method Under Perpetual Inventory System The following units of a particular item were available for sale during the calendar year:
Jan. 1 Inventory 10,000 units at $75.00
Mar. 18 Sale 8,000 units
May 2 Purchase 18,000 units at $77.50
Aug. 9 Sale 15,000 units
Oct. 20 Purchase 7,000 units at $80.25
The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5. Round unit cost to two decimal places, if necessary.
Answer:
Please see attached solution
Explanation:
a. Cost of goods sold . Detailed explanation attached.
b. Ending inventory. Detailed explanation attached.
Note 1.
Weighted average cost per unit on January 20
= $1,545,000/20,000 units
= $77.5
Note 2
Weighted average cost per unit on January 30
= $948,000/12,000 units
= $79.00
Selected transactions for Sheridan Company are presented below in journal form (without explanations).
Date Account Title Debit Credit
May 5 Accounts Receivable 4,400
Service Revenue 4,400
12 Cash 1,930
Accounts Receivable 1,930
15 Cash 2,190
Service Revenue 2,190
Post the transactions to T-accounts. (Post entries in the order of journal entries presented in the question.)
Cash
5/55/125/15 5/55/125/15
5/55/125/15 5/55/125/15
Accounts Receivable
5/55/125/15
5+55+125+15=555555555....
In 2010, real GDP was $13.2 trillion and nominal GDP was $14.6 trillion. What was the GDP deflator for that year?a. 9.6% lower b. 9.6% higher c. 10.6% lower . d. 10.6% higher
Answer:
d. 10.6% higher
Explanation:
Given that;
Real GDP = $13.2 trillion
Nominal GDP = $14.6 trillion
GDP deflator = (Nominal GDP/Real GDP)× 100)
Hence,
GDP deflator = (14.6 / 13.2 ) × 100
GDP deflator = 110.6%
Thus,
= 110.6 - 100
= 10.6% higher
On January 1, 2016, Horton Inc. sells a machine for $25,800. The machine was originally purchased on January 1, 2014 for $46,700. The machine was estimated to have a useful life of 5 years and a residual value of $0. Horton uses straight-line depreciation. In recording this transaction: a. a loss of $2,220 would be recorded. b. a loss of $20,900 would be recorded. c. a gain of $25,800 would be recorded. d. a gain of $2,20 would be recorded.
Answer:
a) a loss of $2220 would be recorded.
Explanation:
Calculation for the Loss on sale
First step is to calculate the Depreciation per annum using this formula
Depreciation per annum = (Purchase Cost-salvage value) / Useful life
Depreciation per annum = 46700/5
Depreciation per annum= $9,340
Second Step will be to calculate the 31/12/15 Book Value
1/1/14 Purchase cost $46,700
Less: 31/12/14 Depreciation for the year ended 31 ($9,340)
31/12/14 Book Value $37,360
($46,700-$9,340)
Less: 31/12/15 Depreciation for the year ended ($9,340)
31/12/15 Book Value $28,020
($37,360-$9,340)
Last step is to calculate the Loss on sale
1/1/16 Value $28,020
1/1/16 Less Sale value ($25,800)
Loss on sale $2220
(28,020-25,800)
Therefore the correct option is :a loss of $2220 would be recorded.
BPS reported the following data for its first year of operations: Sales Revenue $8,000 Cost of Goods Available for Sale 6,200 Operating Expenses 900 Sales Returns & Allowances 640 Sales Discounts Ending Merchandise Inventory: If LIFO is used 820 If FIFO is used 128 925 What is the company's net income if LIFO is elected? A. None of the other 4 answer choices provided are correct. B. $132 C. $1,057 D. $952 E. $1,720
Answer:
D. $952
Explanation:
The computation of the net income in the case when the LIFO is elected
Particulars AMount
Net sales $7,232 ($8,000 - $640 - $128)
less : cost of goods sold ($6,200 - $820) $5,380
Gross Profit $1,852
Less: Operating Expenses $900
Income before taxes $952
less: Income tax $0
Net income $952
Hence, the net income is $952
Do you agree or disagree with the following statements
a. The demand curve facing a monopolistic competitor in a market where all producers charge different prices becomes less elastic when it engages in international trade
b. According to the gravity equation, countries closer to each other trade more
c. The only gain from trade in monopolistic competition in trade is lower prices
d. The closer to 1 the index of intra industry trade is, the greater the difference between exports and imports of the same goods.
Answer:
a. The demand curve facing a monopolistic competitor in a market where all producers charge different prices becomes less elastic when it engages in international trade - Disagree
This statement is not true. If a monopolistic competitor engages in international trade, it will meet more competition, meaning that the audience (demand) that it has is more sensitive to prices, because they have more options available.
b. According to the gravity equation, countries closer to each other trade more - Agree
The gravity equation tells us that the volume of international trade is correlated with geographical proximity and economic size. That is to say, the closer and larger two economies are, the more international trade they engage with each other.
c. The only gain from trade in monopolistic competition in trade is lower prices - Disagree
Gains are the most important in lower prices, but there are also gains in competitiveness and quality.
d. The closer to 1 the index of intra industry trade is, the greater the difference between exports and imports of the same goods. - Disagree
An index of intra industry trade of 1 indicates that the country imports and exports roughly the same amount for a particular type of goods (the goods that belong to that industry). Hence, the statement is not true.
An optimal procedure for organizations to accept projects is to specify a return on investment (ROI) and fund only projects that meet this criterion. A. True B. False
Answer:
False
Explanation:
Capital budgeting is needed in any project work as it entails the process and procedures taken in evaluation and selection of long-term investments that are consistent with the firm's goal of maximizing owner's wealth.
Normally, before a company invest or undergo any project, background work is done to know if the project will yet profit or no, feasibility study is carried out and things are put in place. If it is favourable for the firm and profit is high, firms may choose to invest after weighing the pros and cons (advantage and disadvantage) of the project before investment. So return of investment initial investment is not really considered when taking up a project as all project is done at their own risk.
Credit Losses Based on Accounts Receivable At December 31, Schuler Company had a balance of $364,900 in its Accounts Receivable account and a credit balance of $4,200 in the Allowance for Doubtful Accounts account. The accounts receivable T-account consisted of $370,000 in debit balances and $5,100 in credit balances. The company aged its accounts as follows:
Current $303,000
0-60 days past due 42,000
61-180 days past due 17,000
Over 180 days past due 8,000
$370,000
In the past, the company has experienced credit losses as follows: 1% of current balances, 5% of balances 0-60 days past due, 15% of balances 61-180 days past due, and 40% of balances over six months past due. The company bases its allowance for doubtful accounts on an aging analysis of accounts receivable.
Required:
a. Prepare the adjusting entry to record the allowance for doubtful accounts for the year.
b. Show how Accounts Receivable (including the credit balances) and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet.
Answer:
a. First calculate the adjusting entry to record allowance.
Uncollectible for the year is;
= (303,000 * 1%) + (42,000 * 5%) + (17,000 * 15%) + (8,000 * 40%)
= $10,880
Adjusting entry = Uncollectable amount - Credit balance on allowance
= 10,880 - 4,200
= $6,680
DR Bad Debt Expense $6,680
CR Allowance for Doubtful accounts $6,680
b.
Current Assets:
Accounts Receivable $370,000
Less: Allowance for doubtful accounts ($10,880)
$359,120
Current Liabilities
Customers Overpayments $5,100
The current liability above arises from the credit balance of $5,100 in the Accounts receivable account. Accounts Receivable should have a debit balance so if a credit balance occurs it is an overpayment by a customer.
Scubapro Corporation currently has 500,000 shares of common stock outstanding and plans to issue 200,000 more shares in a seasoned equity offering. The current shareholders have pre-emptive rights on any new issues of common stock by Scubapro Corporation. How many shares would an investor who currently has 20,000 shares, have the right to buy if she exercises her pre-emptive right?A) 200,000 shares.
B) 120,000 shares.
C) 20,000 shares.
D) 12,000 shares.
E) 8,000 shares.
Answer:
Scubapro Corporation
The investor who currently has 20,000 shares has the right to buy this number of shares, if she exercises her preemptive right:
E) 8,000 shares.
Explanation:
Data and Calculations:
Outstanding common stock = 500,000
Planned issue of additional shares = 200,000
Proportion of new issue to outstanding = 0.40 (200,000/500,000)
For an investor with 20,000 shares, she has the right to buy 8,000 (20,000 * 0.40) additional shares.
Discuss a prominent environmental or sustainability practice employed by a company that you believe has been forward thinking and successful in their efforts. How have their policies impacted the company, society, and the environment?
Explanation:
Sustainability is an increasingly recurrent issue on the world stage, which directly affects companies and the way their resources are used. Society increasingly demands that companies be environmentally responsible, as a way of protecting today's society and future generations, since natural resources are scarce and we depend on them for quality of life.
One company we can cite as an example is GOOGLE, a world-renowned company that promotes its environmental responsibility through its communication channels and adopts sustainable practices like the one announced in 2019, which until 2020 the company will not emit carbon in its products and in 2022 all hardware products used in the company will be made of recyclable materials.
Environmental policies have a positive impact on society as a whole, bringing the issue to the fore and making more and more people responsible for exercising sustainability. For the company, we can highlight the reduction of waste in the production process, adding continuous organizational improvement and better positioning of the company. in the market and for stakeholders.
Net Zero Products, a wholesaler of sustainable raw materials. Prepared the following aging of receivables analysis.
Total 0 1 to 30 31 to 60 61 to 90
Accounts receivable $171,000 $96,000 $34,000 $15,000 $12,000
Percent uncollectible 1% 4% 6% 9%
Required:
a. Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method.
b. Prepare the adjusting entry to record bad debts expense assuming the unadjusted balance in the Allowance for Doubtful Accounts is a $2,600 credit.
Answer:
Net Zero Products
a) The balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method is $4,300.
b) Adjusting Entry to record bad debt expense:
Debit Bad Debt Expense $1,700
Credit Allowance for Doubtful Accounts $1,700
To record the bad debt expense for the period and bring the allowance to $4,300 credit balance.
Explanation:
a) Data and Calculations:
Aging of receivables analysis:
Total (days) 0 1 to 30 31 to 60 61 to 90 above 90
Accounts receivable $171,000 $96,000 $34,000 $15,000 $12,000
Percent uncollectible 1% 4% 6% 9%
Allowance for doubtful 0 $960 $1,360 $900 $1,080
Total allowance for doubtful = $4,300 (960 + 1,360 + 900 + 1,080)
b) The adjustment in the Allowance for Doubtful Accounts needed for the current period is $1,700 ($4,300 - $2,600). This amount will be debited to the Bad Debts Expense account and credited to the Allowance for Doubtful Accounts. It will bring the total for the Allowance for Doubtful Accounts to $4,300 from $2,600.
A loss on the constructive retirement of a parent's bonds by a subsidiary is effectively recognized in the individual accounting records of the parent and its subsidiary:_________
I.at the date of constructive retirement
II.over the remaining term of the bonds.
a. I
b. II
c. Both I and II
d. Neither I nor II
Answer:
c. Both I and II
Explanation:
In the case when there is a loss at the time of the retirement of the parent bond by a subsidiary and it could be effectively recorded in the accounting records of the parent and the subsidiary. It could be done at that date when the retirement is done in a constructive way also the bond terms that are left
Therefore both options should be recognized
Hence, the correct option is c.
The basic promotion objectives and adoption process fit very neatly with an action-oriented model, which is called the
A) bricks and clicks model.
B) bait and hook model.
C) AIDA model.
D) DAGMAR model.
E) economic buyer model.
Answer:
C) AIDA model.
Explanation:
AIDA model which the complete words are
✓attention( seek the attention of potential buyer)
✓interest(know their interest)
✓desire
✓action.
Can be regarded as a model that has been in existence since 19th century, which is engaged in marketing to analyze the process the steps/process that consumer follow when making a purchase on a particular goods/product. It should be noted that the The basic promotion objectives and adoption process fit very neatly with an action-oriented model, is called the AIDA model.
Rent expense in Volusia Company's 2016 income statement is $420,000. If Prepaid Rent was $70,000 at December 31, 2015, and is $95,000 at December 31, 2016, the cash paid for rent during 2016 is:_________
Answer:
$445,000
Explanation:
The rent in Volusian company income statement for 2016 is $420,000
The prepaid rent is $70,000 at December 31 2015 and $95,000 at December 31 2016
Therefore the cash paid for rent in 2016 can be calculated as follows
= $420,000+($95,000-$70,000)
= $420,000 + $25,000
= $445,000
Betz Company's sales budget shows the following projections for next year:
Sales in Units: 1st Quarter = 60,000; 2nd Quarter = 80,000; 3rd Quarter = 45,000; 4th Quarter = 55,000
Inventory at the beginning of the year was 18,000 units. The finished goods inventory at the end of each quarter is to equal 30% of the next quarter's budgeted unit sales. How many units should be produced during the first quarter?
a) 24,000
b) 48,000
c) 66,000
d) 72,000
Answer:
c) 66,000
Explanation:
Calculation for How many units should be produced during the first quarte
Using this formula
Amount of Units produced = Ending inventory + Units sold + Beginning inventory
Let plug in the formula
Amount of Units produced= (30% × 80,000) + 60,000 − 18,000
Amount of Units produced= 24,000 + 60,000 − 18,000
Amount of Units produced=$66,000
Therefore the units that should be produced during the first quarter will be $66,000
The actual cash received from cash sales was $36,006 and the amount indicated by the cash register total was $36,010. Journalize the entry to record the cash receipts and cash sales.
CHART OF ACCOUNTS
Water Closet Co.
General Ledger
ASSETS REVENUE
110 Cash 410 Sales
111 Petty Cash 610 Interest Revenue
120 Accounts Receivable
129 Allowance for Doubtful Accounts
131 Interest Receivable
132 Notes Receivable EXPENSES
141 Merchandise Inventory 510 Cost of Goods Sold
145 Office Supplies 520 Sales Salaries Expense
146 Store Supplies 521 Advertising Expense
151 Prepaid Insurance 522 Depreciation Expense-
Store Equipment
181 Land 523 Delivery Expense
191 Store Equipment 524 Repairs Expense
192 Accumulated Depreciation-Store Equipment 529 Selling Expenses
193 Office Equipment 530 Office Salaries Expense
194 Accumulated Depreciation-Office Equipment 531 Rent Expense
532 Depreciation Expense-
LIABILITIES Office Equipment
210 Accounts Payable 533 Insurance Expense
211 Salaries Payable 534 Office Supplies Expense
213 Sales Tax Payable 535 Store Supplies Expense
214 Interest Payable 536 Credit Card Expense
215 Notes Payable 537 Cash Short and Over
EQUITY 538 Bad Debt Expense
310 Common Stock 539 Miscellaneous Expense
311 Retained Earnings 710 Interest Expense
312 Dividends
Answer:
Cash shorting = 36,010 - 36,006 = $4
DR Cash $36,006
Cash Short and Over $ 4
CR Sales $36,010
There is a shortage of cash as the sales figure is more than the cash amount. The Cash Short and Over account will therefore be debited to reflect this expense.
Which of the following is a type of liability?
A. A revenue stream
B. A liquid asset
C. Accounts payable
D. Accounts receivable
Answer:
c
Explanation:
You invest 50% of your money in security A with a beta of 1.6 and the rest of your money in security B with a beta of 0.7. The beta of the resulting portfolio is:_____
a. 1.08
b. 0.8
c. 1.40
d. 1.15
e. 0.36
Answer:
The answer is D). 1.15, hope this helps, have a great day/night, stay safe, happy thanksgiving!
Sick time and vacation time are considered a benefit because even
though you are not at work you still get paid.
True
False
Answer:
TRUEE
i just know
Explanation:
Hope this helps!
if so please dont forget to mark BRAINLIST!!
thx
Beige Corporation, a C corporation, purchases a warehouse on August 1, 2007, for $1 million. Straight-line depreciation is taken in the amount of $411,750 before the property is sold on June 11, of the current year, for $1.2 million. What is the amount and character of the gain recognized by Beige on the sale of the realty?
Answer and Explanation:
The computation of the amount and character of the gain recorded is shown below:
1. Recognized gain would be
= Sales - the cost of the property - recovery cost
= $1,200,000 - $1,000,000 - $411,750
= $611,750
2. Now as per the section 1245 the potential recapture is $411,750
3. Now extra section 291 ordinary income in the case when it is a corporation
= $411,750 ×20%
= $82,350
4. And finally $82,350 would be considered as an ordinary income under section 291 while the remaining balance i.e.
= $611,750 - $82,350
= $529,400
This amount would be considered as a gain under section 1231
Changing views on older employees in the workforce can be summed up by saying that companies used to A) offer pay raises as employees rose through the ranks, but are starting to decrease pay for elderly workers due to changes in Social Security benefits. B) regard older workers as a positive influence in the workforce, but with the aging of baby boomers, this perspective is undergoing a shift. C) encourage retirement to save money, but now are eager to benefit from older workers' knowledge, experience, and positive work ethic D) continue training workers up until the point of retirement, but today they recognize that this is a poor use of resources. E) value the knowledge, experience, and positive work ethic of older employces, but now are encouraging retirement in order to save money
Answer:
The changing views on older employees in the workforce can be summed up by saying that companies used to:
C) encourage retirement to save money, but now are eager to benefit from older workers' knowledge, experience, and positive work ethic.
Explanation:
Older employees have got the wisdom and experience to function effectively in their roles. This is why employers are now trying to derive the best value from older workers. The knowledge and wisdom that employers access from their older workers can be used to encourage the younger workers to attain stellar performance. They also use the older workers to showcase the exemplary conducts which are expected from the younger workers.
A sentence that contains one independent clause and one or more dependent clauses is a
Answer:
Complex sentence they always have one independent clause + 1 or more dependant clause
Joined by using conjunctions!
JRJ Corporation recently issued 10-year bonds at a price of $1,000. These bonds pay $60 in interest each six months. Their price has remained stable since they were issued, that is, they still sell for $1,000. Due to additional financing needs, the firm wishes to issue new bonds that would have a maturity of 10 years, a par value of $1,000, and pay $40 in interest every six months. If both bonds have the same Yield to Maturity, how many new bonds must JRJ issue to raise $2,000,000?(Hint find the YTM of first bond the find the value of 2nd bond)
Answer: 2596 bonds
Explanation:
The following information can be gotten from the question:
Coupon rate = 8.0%
Face value = 1000
Year to maturity = 10
NPER = 20
PMT = Face value × Coupon rate / 2 =(1000 × 0.08) / 2 = 80/2 = 40
Yield = 12%
Rate = Yield / 2 = 12% / 2 = 6%
We then calculate the net proceeds which will be:
= PV(rate, NPER, PMT, FV)
= PV(6%, 20, 40, 1000)
= $770.60
We should note that the amount that needed to be raised is $2,000,000. Therefore, the bond that will be needed to be sold will be:
= $2,000,000 / 770.60
= 2596 bonds
Anna Garden recently opened her own basketweaving studio. She sells finished baskets in addition to selling the raw materials needed by customers to weave baskets of their own. Unfortunately, owing to space limitations, Anna is unable to carry all varieties of kits originally assembled and must choose between two basic packages.
The Basic Kit includes undyed, uncut reeds (with dye included) for weaving one basket. This basic package costs Anna $16 and sells for $30. The second kit, called Stage 2, includes cut reeds that have already been dyed. With this kit the customer need only soak the reeds and weave the basket. Anna produces the Stage 2 kit by using the materials included in the Basic Kit. Because she is more efficient at cutting and dying reeds than her average customer, Anna is able to produce two Stage 2 kits in one hour from one Basic Kit. (She values her time at $18 per hour.) The Stage 2 kit sells for $36.
Prepare an incremental analysis for Anna's basket weaving studio.
Answer:
Stage 1 kit Stage 2 kit Differential amount
Selling price $30 $36 $6
Materials cost ($16) ($16) $0
per unit
Additional labor $0 $18/2 = ($9) ($9)
cost per unit
Contribution margin $14 $11 ($3)
per unit
Anna will lose $3 for every Stage 2 kit that she sells. Only if he is able to sell a much higher quantity of Stage 2 kits would it be worth it, but under current conditions Anna should focus on selling Stage 1 kits.
As an independent student Sally borrowed $4,000 her first semester of college through an Unsubsidized Stafford loan at 6.8% APR, compounded monthly. After her first semester, Sally was able to work her way through school and she graduated three years later without any additional loans. Since Sally did not make any loan payments while she was in school, what is her loan balance upon graduation? a) $4,000.00 b) $4,902.36 c) $7,869.48 d) $7,834.82
Answer:
CPT FV=4902.3689
Explanation:
By using financial calculator:
Given:
PMT = $0
PV = $4,000
N = 12x3 = 36 times
I/Y = 6.8% / 12
By using excel formulas
=FV(6.8%/12,12*3,0,4000)
Future value = $4,902.3689
CPT FV=4902.3689
Because in many industries the cost of generating new ideas is so high, firms must charge a price ________ cost.a. equal to the marginalb. higher than the marginalc. lower than the marginald. equal to the average fixede. lower than the average fixed
Answer:
B. higher than the marginal
Explanation:
Marginal cost can be defined as the additional or extra cost that is being incurred by a company as a result of the production of an additional unit of a product or service.
Generally, marginal cost can be calculated by dividing the change in production costs by the change in level of output or quantity.
Because in many industries the cost of generating new ideas is so high, firms must charge a price higher than marginal cost in order to maximize profits or increase the amount of profits generated.
You have been texting with your friends trying to make plans for this evening. Your best friend Jocelyn is not sure if she will finish her homework in time to come out, but if she does, she wants to go to a new restaurant on the north end of town that you've both been wanting to try. Another group of friends is going to a restaurant on the south end of town, but you've already been to this restaurant and it was only okay. Overall, you would prefer to go to the restaurant with Jocelyn. But if Jocelyn isn't coming out, you would rather hang out with your friends than stay home. No one is returning your calls, but you need to get on the subway and head into town if you want to do anything this evening. You have to decide whether to head north or south. What can we say about a potential dominant strategy in this game?
Answer:
go north.
Explanation:
The potential dominant strategy in this game is to go north. This can be stated through the concept of dominant strategy, which means that the chosen strategy will be the most appropriate according to someone's perspective, that is, the strategy that will be most beneficial and useful.
In the case of the scenario above, it is possible to affirm that the dominant strategy is to go north because the statement provides information that the general, you prefer to go to the northern restaurant with Jocelyn, so this is configured as the correct option, regardless if the Jocelyn may or may not go, because in a dominant strategy what matters is to choose the most useful option for you, regardless of the actions of third parties.
Bikes and More just announced its next annual dividend will be $2.42 a share and all future dividends will increase by 2.5 percent annually. What is the market rate of return if this stock is currently selling for $22 a share?
Answer:
13.5%
Explanation:
market rate of return can be calculated with below expresion
Current Price = D / (K - g)
Where
Current Price = $22 a share
D= Dividend in coming Year
dividend = $2.42
K= rate of return
g =growth rate
22 = 2.42 / (K - 0.025)
Cross multiply we have
22(K - 0.025)= 2.42
Open the bracket we have
22k- 0.55=2.42
2.42 + 0.55= 22k
K = 2.97 / 22
= 0.135
= 0.135×100%
= 13.5%
Therefore, the market rate of return if this stock is currently selling for $22 a share is 13.5
Barlow owns the surface rights for Canyon Ranch, but does not own the subsurface rights. Dusty owns the subsurface rights. Canyon Ranch includes a house, a bunkhouse, and two barns, which are damaged when Dusty is excavating for minerals under the surface. Most likely responsible for the damage is:________.
A) Dusty.
B) Barlow.
C) Dusty and Barlow.
D) no one.
Answer:
A) Dusty.
Explanation:
Generally, when you are dealing with property rights and any damages that occur to real property, the individual that possesses the oldest structure can sue other individuals that damage his/her structure by building or developing a new one.
E.g. in many cities, buildings or even homes tend to be built right next to other homes or buildings (specially in down town areas). If you are building a house right next to an existing house and the walls are damaged because because you dug to build a basement, then you are responsible and liable for the damages even if you never invaded the other property.
After graduating law school Amy has to start repaying her $110,000 in loans. Assuming the annual interest rate is 7.5% over a 20 year repayment period, what will be the monthly loan payments?
a. $886.15
b. $458.34
c. $899.18
d. $906.93
Answer:
monthly payment= $886.15
Explanation:
Giving the following information:
PV= $110,000
i= 0.075/12= 0.00625
n= 12*20= 240
To calculate the monthly payment, we need to use the following formula:
monthly payment= (PV*i) / [1 - (1+i)^(-n)]
monthly payment= (110,000*0.00625) / [1 - (1.00625^-240)]
monthly payment= $886.15