Which type of credit requires that borrowers carefully manage the debt so it doesn't get out of control? explain why this type o
2 answers:
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Answer:
If CF0 is positive and all the other CFs are negative, then you can still solve for I
TRUE. This will be the formula for ordinary annuity.
This is the case of a loan on which the company receives a positive cash flow at the beginning and then makes subsequent cash payments, thus negatives cash flows.
Explanation:
If you have a series of cash flows, and CF0 is negative but each of the following CFs is positive, you can solve for I, but only if the sum of the undiscounted cash flows exceeds the cost
FALSE If the sum is below the cost then it will give a negative rate
To solve for I, one must identify the value of I that causes the PV of the positive CFs to equal the absolute value of the FV of the negative CFs. FALSE you can't compare a present value with a future as they are on different dates.
It is impossible to find the value of I without a computer or financial calculator.
FALSE There are method of approximation the difference is that the computer does this faster than humans.
If you solve for I and get a negative number, then you must have made a mistake
FALSE if the project return are lower than cost the rate will be negative.
Answer:
The answer is "1.1"
Explanation:
In the case of a single Interest, the principal value is determined as follows:
In case of discount:
Let income amount = 100, time = 1.5 years, and rate =20 %.
Formula:
A = P(1+rt)
A =P+I
by putting vale in the above formula we get the value that is = 76.92, thus method A will give 76.92 value.
If we calculate discount then the formula is:
P = M(1-rt)
M = 100 rate and time is same as above.
Thus Method B will give the value that is 70
calculating ratio value: