Business Analysis

BusinessAnalysis

Jacksonvilletechnical college gets state aid of 3,445,553 dollars the deputypresident finance invests 2000000s dollars for two months ininvestment that pay 11.5% simple interest. Assuming that the interestis per annum then the interest that will be earned is calculated asfollow. 11.5 ÷100 × 2 ÷ 12 × 2000000 = 38333.33. That will be theinterest earn from the investment. Alternative f=p(1+Rn),whereR=rate, n=time, p=principal amount or present value and f=futurevalue. This can be calculated as follows

F=2000000(1+2÷12×11.5÷100)=2003833.33. Thus, the interest ratewould be future value less present value.200383333.33-2000000=38333.33 in dollars.

` Answer.Barney Casey loan earned an interest of 5000 thousand in total overthe two years he had been loaned. To calculate simple interest rate,the time was taken to pay the amount owed plus interest is essentialin deterring the interest rate. Taking X as the value of the interest(1+2(X÷100) ×40000=45000. The value 2 refers to the twoyears,(x÷100), represents the unknown interest rate inpercentage.400000(1+2x÷200)=45000. 40000+400x=45000:400x=45000-40000=5000 400x=5000 x=5000÷400 x=12.5. But this valuehad been multiplied by two so we divide by 2. 12.5÷2=6.25%. Thus,the interest rate per annum is 6.25%. Proving the answer(1+6.25÷100×2)×40000, 1.125×40000=45000. Proved.

SaraiSherman deposits 4450 in a period of 60 days technically that is aperiod of 2 months. Assuming it was a leap year the end date of herinvestment would end on 25th April while if it was not it will matureon 26th April. Her ordinary interest will be F=P (1+Rn),F=4450(1+16÷100) : (1+0.16)4450=5162 : 5162-4450=712 In a year thisinterest would earn 712 dollars. A year has 365 days 365=712 what is60=? 712×60÷365=117.04 dollars interest. Thus, Sarai gets anordinary interest of 117..04 dollars in the 60days period sheinvested his money.

` Futurevalue means the amount of present value will be worth at maturity ofthe interest In a future date or rather the value of principal amountafter six months. Future value is calculated as F=p(1+Rn).F=1000(1+6÷12×6÷100) : 1000(1+0.03)=1030dollars. The future valueof the loan is 1030. To calculate the charge or the interest you lesspresent value from future value. 1030-1000=30dollars

Firstloan offer is offered at the rate of 8% simple interest. This meansthat Acton will pay an additional 720 for the price of the loan.120000×8÷100×9÷12=720. The second offer is a discounted loanthis means that Acton will have to pay the loan with a discount orreduction on the principal amount. 12000×9÷12×7÷100=630.

Analyzingthe two offers, in the first offers Acton will bear a cost 720 foracquiring the loan that will be the interest for the loan in a periodof 9 months in total he will pay 12000+720=12720 dollars. On theother hand, the second offer provides Acton with a discount of 630,meaning the total amount Acton will pay will be less 630. That is12000-630=11370 dollars.×

sOfthe two offers if Acton is a rational person he will go for the loanthat offers a discount of 7% on the amount loaned. As it has a lowcost of 630÷12000×100=5.25, while the first offer has 8÷12×9×100=6%

Reference

ACCAExamples: Simple Interest Formula [Web log post]. (n.d.). Retrievedfromhttp://accaexample.blogspot.co.ke/2015/04/simple-interest-formula.htm