Sienna has experienced a few profitable months and has over $20,600 in disposable income. However, she should
Question:
Sienna has experienced a few profitable months and has over $20,600 in disposable income. However, she should replace a few high-end blenders for the smoothie bar. She's considering investing her profits in a short-term fund with a high-interest yield and borrowing the money needed to purchase the blenders, especially since she can write off a portion of her loan interest when she does her taxes. (Chapter 10)
Help Sienna determine the best options for her loans and investments.
Chapter 10 Simple Interest
1. Sienna is considering the following loan for the blenders; using the exact interest method, how much interest would she pay?
Principal | Rate (%) | Time (days) | Exact Interest |
$15,000 | 13% | 120 | = |
Answer:___________
2. Simultaneously, she found a short-term investment fund using the Ordinary interest method to invest the $20,600; how much interest would she earn?
Principal | Rate (%) | Time (days) | Ordinary Interest |
$20,600 | 12% | 98 | = |
Answer:___________
3. Mike Johnson is expecting to get a massive bonus in 3 months, so he is considering taking out a personal loan for $5,880 at the Mountain Ridge Bank for 110 days to purchase his fiancé a wedding ring; of course, he will pay it back once he gets his bonus. The bank prefers the standard method for calculating interest.
What interest rate will be charged if the interest amount is $152? (Round to the nearest tenth of a percent)
Answer:___________
4. Unfortunately, following a few very profitable months, the COVID-19 pandemic struck, and Sienna had to shut down the store for three months. However, she still had to pay her rent, utilities, and employee salaries. She knew government assistance was coming but wouldn't be here for at least two months. So, she borrowed $40,000 from her bank on April 6 for 66 days. The Rate was 14% using the Ordinary Interest method. On day 25 of the loan, 2 of her employees volunteered to go on unemployment so that she could pay $15,000. Then, on day 45 of the loan, she could reopen the store slowly and make a 2nd partial payment of $10,000.
What was the new maturity value of the loan? In other words, how much does she still owe? And on what date would the remaining balance be due?
Answer:___________
5. To pay off her High-Interest Credit Card quicker, Katrina Jackson took out a short-term loan for $10,000 as a simple discount promissory note at a bank discount rate of 6%.
If the note's term was 125 days, what was the effective interest rate of the message? In other words, what was the actual interest rate she paid.? (Round your answer to the nearest hundredth of a percent)
Answer:___________
Chapter 11 Compound Interest and Present Value
1. Sienna's best friend Mia was taking a Business Mathematics course at her local community and learned about the power of Compound Interest. She shared this information with Sienna, who had only invested in short-term simple-interest funds until now.
Table 11-1 (below) helps Sienna calculate the compound and compound interest amounts for the following potential investments.
Principal | Period (years) | Nominal Rate (%) | Interest Compounded | Compound Amount | Compound Interest |
A.$7,700 | 5 | 6% | Quarterly | ____________ | _____________ |
B.$3,000 | 1 | 6% | Monthly | ____________ | _____________ |
2. Now understanding the power of earning compound interest, Sienna realizes that she has a few future purchases she wants to make; one long-term plan is to set up a $150,000 (future value) college fund for her kids. The other is she wants to take a $5,500 (future value) European vacation in about a year and a half.
Help Sienna determine the present value (principal) of what she would need to invest now, under the following terms, and the total compound interest for each investment.
Use Table 11-2 (Below). Round answers to the nearest cent.
Compound Amount | Term of Investment | Nominal Rate (%) | Interest Compounded | Present Value | Compound Interest |
A.$150,000 | 22 years | 15% | Annually | __________ | ___________ |
B.$5,500 | 15 months | 8% | Quarterly | __________ | ___________ |
3. Mike Bicycle Delivery Service plans to expand its service area in 4 years; they will need 148,800 to buy six delivery vans. If the company has $36,000 to invest today, how much would they need to pay for each new van in 4 years? New City's bank is currently paying 12% interest compounded quarterly. (Use table 11-2)
Answer:___________
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr