Borrowing to Start a Business

Jeremy, a budding entrepreneur, was excited that his presentation at his college annual entrepreneurial competition was voted the best by every judge. An angel investor in the audience was very impressed by his business plan and offered to help him start his business by offering him a loan at 10.00% compounded semi-annually. After 4 years, his business had savings of $52,536.00 and he used the entire amount to completely pay off his outstanding debt with the investor.

a. What was the loan amount provided to him by the angel investor and what was the accumulated interest over the four-year period?

PV =

I =

Round to the nearest cent.

b. What rate, compounded monthly, would have resulted in the same accumulated debt?

j =

%

Round to two decimal places.

c. How long (rounded up to the next month) would it take for his debt to reach $73,000.00 if he does not repay any amount throughout the term? Assume the same interest rate of 10.00% compounded semi-annually throughout this extended period.

years and

months

Round up to the next month.

d. If he had obtained the same loan amount from a local bank, it would have accumulated to $52,536.00 in 44 months instead of four years. What is the interest rate compounded semi-annually charged by the local bank?

j =

%