Key Concept Questions: 10

1. 10-5. Calculate the annual amount of interest (assuming no principal repayment) for each of the following:

1. Term loan of $122,000 over 15 years at 6.5 percent

2. Line of credit for $50,000 drawn 50% all year at 10 percent

3. 15 shares of stock purchased at $12.50 per share

4. Bonds trading at par for $2,000 with a 7 percent rate

2. 10-6. If the owner of Bright Rays Tanning Salon, Inc., invested $200,000 and had an investor pay in $45,000 for 15 percent of the corporation, what is the valuation of the business for the investor?