Alice needed capital to expand his business. He borrowed a loan of $20,000,000 f
ID: 2708934 • Letter: A
Question
Alice needed capital to expand his business. He borrowed a loan of $20,000,000 from the bank and the load would be compounded monthly at 4.5% p.a. immediately after the loan was incurred.
(a) Alice would repay the load by monthly payments for 10years, for a total of 120 payments.
(i) Compute the monthly payment
(ii) What was the total interest charged for this amortization?
(b)Due to financial reasons, Alice needed to defer the monthly payments. He would pay the first monthly payment starting from the end of the 49th month after the load was incurred.
(i) Calculate the revised monthly payment if Alice would finish paying the loan in 6 years, for a total of 72 payments
(ii) Find the total interest charged for the whole loan.
Explanation / Answer
Answer:3
At 11000 units level:
Total variable cost = Material cost + wages cost
=(11000 units * $3) + (11000 units * $30 /10) = $66000
Total Fixed cost = $23000 +$15000 = $38000
Hence
Total Cost per unit = (66000 + 38000) / 11000 = $9.45 Per unit
Selling price is $9.50 per unit
So now it shall be profitable because selling price is more than the total cost per unit.
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