Question

Questions (10 pts in totals) For Assignment 1, you are asked to solve the following five problems shown at the end of Chapters 1 and 2 in the textbook: 1. 9, 1.24, 1.32, 1.36, and 2.21 (Solve the questions after changing the numbers as follows). 1) 1.9 (2pts) -$3,885,000 $4,000,000 2) 1.24 (2pts): $19,000 - $20,000, +$8,100 → +$8,500 (No need of calculation. Cash flow diagram only) 3) 1.32 (2pts): $90,000 $85,000 4) 1.36 (2pts): $50,000 → 55,000 5) 2.21 (2pts): (A/P, 13%, 15) → (F/A, 13%, 10) (2.21(1) only)

Answer 1

Question 1.9

Amount borrowed by RKI Instruments = $3,500,000

Amount repaid by RKI Instruments = $4,000,000

The amount has been repaid after a year.

Calculate the interest paid -

Interest paid = Amount repaid by RKI Instruments - Amount borrowed by RKI Instruments

Interest paid = $4,000,000 - $3,500,000 = $500,000

The interest paid by RKI Instruments on the loan was $500,000.

Calculate the interest rate of the loan -

Interest rate = [Amount of interest paid/Amount borrowed by RKI Instruments] * 100

Interest rate = [$500,000/$3,500,000] * 100 = 14.28%

Thus,

The interest rate on the loan paid by RKI Instruments was 14.28%.