Saved Help Save Exit Submit Check my work Brady and Sons us

Saved Help Save & Exit Submit Check my work Brady and Sons uses accounts receivable as collateral to borrow money for operations and payroll when revenues are low. If the company borrows $300,000 now at an interest rate of 12% per year compounded monthly and the rate increases to 15% per year compounded daily after 7 months, how much will the company owe at the end of one year? At the end of the year, the company will owe $ i

Solution

ANSWER:

SINCE THE NO OF WEEKS IS NOT AN ABSOLUTE NUMBER I HAVE TAKEN AS IT HAS COME AND IF YOUR TEACHER HAS TAKEN 34 OR 35 WEEKS THEN PLEASE CHANGE 30.14 TO EITHER 30 OR 31 , OTHERWISE REST OF THE CALCULATION IS OK AND NO OF DAYS IN A YEAR I HAVE TAKEN AS 365 DAYS.

NO OF DAYS IN 7 MONTHS = 211

NO OF WEEKS = 211 / 7 = 30.14 ( I AM TAKING 30.14 , ALTHOUGH ONE COULD TAKE 30 OR 31 WEEKS, SO PLEASE CHECK WITH YOUR TEACHER)

FV = PV * ( 1 + R ) ^ N

FV = 300000 * ( 1+12% / 52) ^ 30.14

FV = $321,585.28

FV AFTER 5 MONTHS WILL BE

FV = PV * ( 1+R) ^ N

FV = $321,585.28 * ( 1 + 15% / 12) ^ 5

FV = $342,193.16