Question

1
Tamarisk Company purchased a machine at a price of $109,700 by signing a note payable, which requires a single payment of $132,737 in 2 years. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Assuming annual compounding of interest, what rate of interest is being paid on the loan? (Round answer to 0 decimal places, e.g. 52%.) Rate of interest % LINK TO TEXT What would be the purchase price of the machine had Tamarisk negotiated a single payment of $128,500 in 2 years, using the same effective rate? (Round answer to 2 decimal places, e.g. 5,275.25.) Purchase price of the machines
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Answer 1

Answer:

1.)

Future Value - Present Value (148) Given where r= interest rate n = no. of years fv= 132737; PV = 109700 ; r = ? 32737 ; PV = 109700 ; 2=? ; n =2 years 132737 = 109700(1+y)? 1.21 = (1+0) 111=1tr 18=10% Now if = 10% ; n = 2 years Fu = 128.500; PV= ? ; 128500 = p.v(1740) 128500 = PV(100) 128500 = Pu(1.21) Prv = 128500 1:21 P.V=106198.34

2.)

Amount of Interest - Future Value - Present Value - (25694-26)x15) – 1 95000 + 385413,9 - 175000 Total of Art of Interest = 2104 13.9.

Future Value - 1 eat (x) = ( Present Value) Interest - 1385413,9 15, (175000 = (2.20) 0.071 8 – 0.06 = 6%

Rate of interest as per manufacturers plan, where as rate of interest if cullumber borrows money from bank is 10%. So better not to borrow from bank.