Which will require additional financing

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Reference no: EM132061304

1. A borrower is repaying a loan with 10 annual installments of $2000. Half of the loan is repaid by the amortization method at an effective rate of i = .06. The other half of the loan is repaid by the sinking fund method in which the lender receives i = .06 and the sinking fund accumulates at i = .05. Find the amount of the loan to the nearest dollar.

2. Adams Manufacturing Inc. buys $11.5 million of materials (net of discounts) on terms of 2/10, net 60; and it currently pays after 10 days and takes the discounts. Adams plans to expand, which will require additional financing. If Adams decides to forgo discounts, how much additional credit could it obtain? Round your answer to the nearest cent. Do not round your intermediate calculations. Use 365 day in a year.

Reference no: EM132061304

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