Calculating Interest Round answers to two decimal places. Where calculations are required you should show your work to help you during the quiz. 1. $1,000 borrowed for 2 months at a 9% APR will generate interest income for the lender and expense for the borrower of 2. $5,000 lent for 6 months at 11% APR will generate interest income of 3. $6,000 borrowed for 6 days at 8% APR will generate interest expense of $ 4. $12,500 loaned for one year with a 6% APR will generate interest income of $ 5. When buying a new copier, the dealer offers you a financing arrangement on the $27,450 you need to borrow to make the purchase. The offer includes a choice of 0% APR interest for 12 months or a $4,000 rebate off of the $27,450. If you take the 0% loan you give up the rebate to the dealer. If you take the rebate you cannot have the 0% loan, but instead are offered an 8% APR loan for 9 months. A condition of the rebate is that you must use the dealer to finance the purchase. Alternatively, your local bank offers you 4% APR interest on the equipment loan for 12 months. The loan terms from each party are that the principal and all interest will be paid in the specified time from the date of sale as a lump sum. For A., B. and C. determine the "cost"; that is the amount of cash paid out of pocket. A. The 0% loan will cost: B. The 4,000 rebate offer with borrowing at 8% cost is: C. The local bank loan will cost: Which offer should you take? State your choice and show the total cash outlay that will be required: 6. Your business has four suppliers that have provided goods and services to you this last month. They have sent you invoices asking for payment with the following terms: 1/5, n10 on an invoice of $1,200 of Crazy Eddie electronics. Enron WorldCom Arthur Anderson month of $800. 2/10, n30 on the utility bill of $230. 1/20 n60 on the telephone bill $410. 3/15 n20 for the accounting services last Business has been slow and you are short of cash. In addition, your customers are not getting you paid as fast as you would like. Which of the above should be paid first (list them in the order they should be paid and how much they will be paid) if you have only $2,000 in the next 30 days to settle the bills