Kenny, a budding entrepreneur, was excited that her presentation at her college annual entrepreneurial competition was...

 

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Kenny, 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 mosaic and antiques store by offering her a loan at 5.75% compounded quarterly. After three years, her business had savings of $70, 500 and she used the entire amount to completely pay off her outstanding debt with the investor. 1. What was the loan amount given to her by the angel investor and what was the accumulated interest over the three-year period? 2. What rate, compounded daily, would have resulted in the same accumulated debt? 3. What is the effective rate of the daily compounded compounded rate calculated in part (2)? 4. How long would it take for her debt to reach $90,000 if she does not repay any amount throughout the term? Assume the same interest rate of 5.75% compounded quarterly throughout this extended period. 5. What would her savings be if the loan had been issued to her at a semi-annually compounding frequency? 6. What was the loan amount given to her by the investor if she was charged 5.75% compounded quarterly for the first two years, and 5.75% compounded monthly for the third year and the loan accumulated to $70, 500 in three years? Kenny, 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 mosaic and antiques store by offering her a loan at 5.75% compounded quarterly. After three years, her business had savings of $70, 500 and she used the entire amount to completely pay off her outstanding debt with the investor. 1. What was the loan amount given to her by the angel investor and what was the accumulated interest over the three-year period? 2. What rate, compounded daily, would have resulted in the same accumulated debt? 3. What is the effective rate of the daily compounded compounded rate calculated in part (2)? 4. How long would it take for her debt to reach $90,000 if she does not repay any amount throughout the term? Assume the same interest rate of 5.75% compounded quarterly throughout this extended period. 5. What would her savings be if the loan had been issued to her at a semi-annually compounding frequency? 6. What was the loan amount given to her by the investor if she was charged 5.75% compounded quarterly for the first two years, and 5.75% compounded monthly for the third year and the loan accumulated to $70, 500 in three years?

Answer rating: 100% (QA)

Q1 loan amount given to her by angle investor and interest Solution Kennys loan was 575 compounded quarterly Her loan is compounded after 3 months whi... View the full answer