HANSON SKIS BALANCE SHEET JUNE 30^th 2020

Assets			Liabilities / Equity
Cash / Cash Equivalents	$ 50,000		Accounts Payable	$ 9,000
Accounts Receivable	$ 3,000		Wages Due	$ 5,000
Inventory	$ 12,000		Interest Due	$ 7,000
Prepaid Expense	$ 7,000		Unearned Revenue	$ 5,000
Current Assets	$ 72,000		Current Liabilities	$ 26,000
Machinery & Equipment	$ 12,000
Buildings	$ 130,000		Notes payable	$ 50,000
Accumulated Depreciation	$ (14,000)		Long Term Liabilities	$ 50,000
Net Fixed Assets	$ 128,000		Total Liabilities	$ 76,000
			Equity
			Common Stock/PIC	$ 85,000
			Retained Earnings	$ 39,000
			Total Equity	$ 124,000
Total Assets	$ 200,000		Total Liabilities and Equity	$ 200,000

HANSONs Sales from June 30^th 2019 through June 30^th 2020 were: 200,000 USD and Hansons Profit Margin was: 4.5%

HANSON SKIS SALES PLAN for June 30^th 2020 through June 30^th 2021 is 270,000 USD

a. What is Hansens estimated FINANCE REQUIREMENT for fiscal year 2021?

b. Mr. Hanson decided that in addition to the sales increase he wanted to acquire additional equipment. So, he borrowed $50,000 at 10% annual interest for FIVE(5) Years from his local bank. The bank agreed to let him pay the loan in full at the end of the 5-year period i.e., no monthly or annual payments.

He calculated a FUTURE VALUE (FV) using simple interest i.e., annual interest calculations at 10%. What is the FUTURE VALUE that he calculated?

However, the bank manager pointed out the loan interest would be based on an EFFECTIVE RATE (Determined by daily compounding using a Bankers Year). What is the EFFECTIVE RATE AND ACTUAL FUTURE VALUE DUE?

c. The bank manager also offered Mr. Hanson a second option. That option was to pay an EQUAL FIXED SUM MONTHLY, AMORTIZING PRINCIPAL AND INTEREST to pay off the loan in FIVE YEARS. What are the MONTHLY PAYMENT AMOUNTS AND FINAL TOTAL PAID FOR THE $50,000 LOAN?