Accounting Sheena has been offered the chance to buy a 50% share in the stone preparing business she buys from for $300,000. Sheena has inquired about borrowing the sum from the bank and has been quoted a 6% annual rate. She expects the business to maintain its $100,000 annual profit level for the next ten years. Sheena also wants to repay the loan within ten years, so she feels like this is an appropriate investment evaluation horizon. She is wondering what some appropriate methods of evaluating this investment opportunity might be. In addition to learning about how you would evaluate the investment and why she wants to know about other relevant factors which should be considered.

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An effective APR is the interest rate for a whole year annualized rather than just a monthly feerate ... View the full answer