Question

In: Finance

1a. A business had accounts receivable of $124,800 at the end of 2008 and $145,700 at...

1a.

A business had accounts receivable of $124,800 at the end of 2008 and $145,700 at the end of 2009. Calculate the percent change (rounded to the nearest tenth of a percent).

a 14.3%
b

16.7%
c

negative 14.3%
d

negative 16.7%

1b.

Which type of statement is for a period of time: Income statement, or balance sheet?

a

Balance Sheet
b

Income Statement
c

Both
d

Neither

1c.

You are thinking about getting a 40-year $165,000 mortgage loan at 7.75% interest. How much interest would you pay over the 40 years?

a

$370,881.60
b

$13,397.04
c

$535,881.60

$1,116.42

Solutions

Expert Solution

1a. b. 16.7%

Change Percentage = (Account receivable at 2009 – Account Receivable at 2008) / Account Receivable at 2008

Change Percentage = ($145,700– $124,800) / $124,800

Change Percentage = 16.75%

Hence, Correct option is b. 16.7%

1b. c. Both

Income statement and Balance Sheet both are for period of time

Hence, Correct option is c. Both

1c. Correct option is a. $370,881.60

Finding payment per period:

Asset Value = A

$165,000.00

Down Payment = DP =

$0.00

P = Principal Loan = (A - DP) =

$165,000.00

R = (Given Rate / No. of Payment in a Year) = 7.75%/12 =

0.645833%

N = Numbers of payment = 40 x 12

                   480

PMT = Payment = P x R x (1+R)^N / ((1+R)^N - 1) =

          1,116.42

Formula for calculating payment (working)

PMT = P x R x (1+R)^N / ((1+R)^N - 1)

PMT = 165000*(7.75%/12)*(1+(7.75%/12))^480/((1+(7.75%/12))^480-1)

PMT = $ 1,116.42 (Rounding to nearest cent or two decimal places)

Total amount paid over life of the loan = PMT x N =

$535,881.60

Total Interest paid = Total amount paid over life of the loan - Principal loan =

$370,881.60

Hence, Correct option is a. $370,881.60

jeff jeffy answered 3 years ago
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