Question
Consider the following: Elon is a recent college graduate who has been working in a full-time position for company ABC for two years now. Recently,
Consider the following: Elon is a recent college graduate who has been working in a full-time position for company ABC for two years now. Recently, Elon has come up with a brilliant idea to start his own business, however he lacks the funding he needs to get started. His retired grandfather, Walter, offers to pitch in $200,000 to help Elon get started, but requests a 30% ownership in the company. Aunt Kaye also offers Elon $300,000 in funding. Kaye, however, wants to be paid back in one payment at the end of the year and charge an interest rate of 4%.
Consider the following for parts d) and e): After receiving the funding needed, Elon has a successful year. Elons business makes a profit of $300,000 in the first six months and $800,000 during the next six months. The business does not retain or invest any of the money.
- How much money does Kaye receive? What is her return?
- How much money does Walter receive? What is his return?
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