Question: To get started in a new telecommuting position with AB84 Business, Antonio Brown took out a $1000 loan at i = 10% per year for
To get started in a new telecommuting position with AB84 Business, Antonio Brown took out a $1000 loan at i = 10% per year for 4 years to buy home office equipment. From the creditors perspective, the investment in this young entrepreneur is expected to produce an equivalent net cash flow (NCF) of $315.47 for each of 4 years. This represents a 10% per year rate of return on the unrecovered balance. Compute the amount of the unrecovered investment for each of the 4 years using (a) the rate of return on the unrecovered balance (the correct basis) and (b) the return on the initial $1000 investment.
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