Accounting

1. You borrowed $10,000 at 8% nominal interest rate per annum and compounded semi-annually. How much would be the total interest payable at the end of five years if you did not make any payments?

2. A bank adds interest monthly to investors' accounts even though interest rates are expressed in annual terms. The current rate of interest is 12%. You deposit $2,000 on 1 July. How much interest will have been earned by 31 December (to the nearest $)?

3. . A project would involve a capital outlay of $40,000. Profits (before depreciation) would be $9,000 per year. The cost of capital is 10%. Would the project be worthwhile if it lasts:

 a. Five years 

b. Seven years

4. A project costs $22,000. It would earn $6,000 per year for the first three years and then $4,000 per year for the next three. Cost of capital is 10%. Is the project worth undertaking?

Answer rating: 100% (QA)

Question 1 PV 10000 NOM 8 PYR 2 Number of years 5 Number of payments 5 2 10 FV10 000 8 NOM 5 years 1... View the full answer