Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

what are the answers to this problem? Borrowing to Start a Business Enea, a budding entrepreneur, was excited that her presentation at her college annual

what are the answers to this problem?

image text in transcribed
Borrowing to Start a Business Enea, a budding entrepreneur, was excited that her presentation at her college annual entrepreneurial competition was voted the best by every judge. An angel investor in the audience was very impressed by her business plan and offered to help her start her designer clothing store by offering her a loan at 6% compounded semi-annually. After two years, her business had savings of $80,654 and she used the entire amount to completely pay off her outstanding debt with the investor. a. What was the loan amount provided to her by the angel investor and what was the accumulated interest over the two year period? . What rate, compounded monthly, would have resulted in the same accumulated debt? . How long (rounded up to the next month) would it take for her debt to reach $100,000 if she does not repay any amount throughout the term? Assume the same interest rate of 6% compounded semi-annually throughout this extended period. . If she had obtained the same loan amount from a local bank, it would have accumulated to $80,654 in 18 months instead of two years. What is the interest rate compounded semiannually charged by the local bank? . Calculate the loan amount provided to her by the angel investor if the loan had been issued to her at an annually compounding frequency instead of a semi-annually compounding frequency. Compare your answer to (a) and determine what her savings would be. If her contract with the investor required that she settle all dues in two years, how much could she have borrowed initially if she was sure that she could repay $25,000 in one year and $40,000 at the end of two years? . What was the size of the loan provided by the investor if she was charged 6% compounded semi-annually for the rst year, and 8% compounded quarterly for the second year and it accumulated to $80,654 in two years

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones

10th Edition

324300980, 978-0324300987

Students also viewed these Accounting questions