Question 6 ABC needs money to buy a new car. His friend accepts to lend him...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 6 ABC needs money to buy a new car. His friend accepts to lend him the money so long as he agrees to pay him back within five years and he charges 7% as interest (compounded interest rate). a) ABC thinks that he will be able to pay him $5000 at the end of the first year, and then $8000 each year for the next four years. How much can ABC borrow from his friend at initial time. b) ABC thinks that he will be able to pay him $5000 at the end of the first year. Estimating that his salary will increase through and will be able to pay back more money (paid money growing at a rate of 0.75). How much can ABC borrow from his friend at initial time. autobes H 02 Question 6 ABC needs money to buy a new car. His friend accepts to lend him the money so long as he agrees to pay him back within five years and he charges 7% as interest (compounded interest rate). a) ABC thinks that he will be able to pay him $5000 at the end of the first year, and then $8000 each year for the next four years. How much can ABC borrow from his friend at initial time. b) ABC thinks that he will be able to pay him $5000 at the end of the first year. Estimating that his salary will increase through and will be able to pay back more money (paid money growing at a rate of 0.75). How much can ABC borrow from his friend at initial time. autobes H 02
Expert Answer:
Answer rating: 100% (QA)
Solution Part a Interest rate r 7007 0 5000 8000 8000 1 2 3 PV of these ... View the full answer
Related Book For
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Posted Date:
Students also viewed these finance questions
-
The Boa Co. has the following accounts in its ledger: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts Payable; Alfonso Finley, Capital; Alfonso Finley, Drawing; Fees Earned; Rent...
-
Indicate whether each account is an asset, a liability, or a stockholders equity account, and whether it would have a normal debit or credit balance. (a) Accounts Receivable. (b) Accounts Payable....
-
The Zuni Co. has the following accounts in its ledger: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts Payable; Capital Stock; Dividends; Fees Earned; Rent Expense; Advertising...
-
Unlike other sciences, the nature and value of philosophy is derived from reflection versus testing, measuring, or examining. O True O False 4
-
Why is there a grace period for contributions to a Keogh retirement plan?
-
In expected value calculations, how reliable are the probabilities used?
-
Dale Company experiences heavy sales in the summer and early fall, after which time it has excess cash to invest until the next spring. On November 1, 20x6, the company invested $194,000 in U.S....
-
Equivalent units, zero beginning inventory. Nihon, Inc. is a manufacturer of digital cameras. It has two departments: Assembly and Testing. In January 2009, the company incurred $750,000 on direct...
-
\f
-
The comparative balance sheet of Iglesias Inc. for December 31, 20Y3 and 20Y2, is as follows: Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows: a....
-
1,316.36 * PVIFA = 1,316.36 * 103.6246 = 136,407 4. Suppose Rob wants to pay off the loan in 15 years. How much extra must he pay each month to do so? A) $ 11.25 B) $201.99 C) $294.95 D) $311.95 E)...
-
For each of the following functions f(t), give the derivative f'(t). a) If f(t) = (t + 2), then the derivative f'(t) = == b) 1 If f(t) = 4, then the derivative f'(t) == c) If f(t) = sin(5t), then the...
-
Discuss the importance of the knowledge of the cost of capital of Coles (or any supermarkets).
-
Suppose you short-sell a $100m 10-year on-the-run par treasury and buy an $100m 10-year off-the-run par treasury to earn the yield spread in late 1997. At the time, the rates on these bonds were...
-
1. Conde Inc. has projected sales to be: February, $20,000; March, $18,000; April, $16,000; May, $20,000; and June, $22,000. Conde has 30% cash sales and 70% sales on account. Accounts are collected...
-
In order to establish a contract there must be an agreement between competent parties, based on genuine assent of the parties and supported by consideration, that does not contravene principles of...
-
Is it possible for a firm's cash cycle to be longer than its operating cycle? Explain why or why not?
-
In Problems 718, write the augmented matrix of the given system of equations. f0.01x0.03y = 0.06 [0.13x + 0.10y = 0.20
-
Columbia Sportswear Company had accounts receivable of $299,585,000 at January 1, 2009, and $226,548,000 at December 31, 2009. Sales revenues were $1,244,023,000 for the year 2009. What is the amount...
-
Olivia Dietz is studying for the next accounting midterm examination. What should Olivia know about (a) Departing from the cost basis of accounting for inventories and (b) The meaning of market in...
-
On July 15, a company purchases on account goods costing $1,900, with credit terms of 2/10, n/30. On July 18, the company receives a $400 credit memo from the supplier for damaged goods. Give the...
-
Solve various time value of money scenarios (Learning Objectives 3, 4)} 1. Jeff just hit the jackpot in Las Vegas and won \(\$ 25,000\) ! If he invests it now at a \(12 \%\) interest rate, how much...
-
Apply capital budgeting to a current event (Learning Objective 1)} Look through the business section of the newspaper. Find a company that has recently made a capital investment. Summarize the...
-
Retirement planning in two stages (Learning Objective 3)} You are planning for a very early retirement. You would like to retire at age 40 and have enough money saved to be able to draw \(\$...
Study smarter with the SolutionInn App