If you borrow $5,000 at an annual interest rate of 9.0% for six years, what will your repayment(s) be if this is a discount loan?
What will be an ideal response?
Answer: FV = PV × (1 + r)n = $5,000 × (1.09)6 = $8,385.50 in year six only.
Explanation: A discount loan pays in full at maturity.
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Suppose that World Corp. signs a contract to build a lumber processing plant in Siberia. If World Corp. signs a second contract agreeing to take partial payment for the plant in the form of lumber products produced at the plant, it is engaging in:
A) barter. B) switch trading. C) offset. D) compensation trading. E) a hybrid countertrade arrangement.
Which of the following is NOT considered to be an act of bankruptcy? A debtor
A) admits at a meeting of his creditors that he is unable to pay his debts B) shows at a meeting of creditors financial statements that show he is insolvent C) gives notice to his creditors that he has suspended payment of his debts D) ceases to meet his liabilities generally as they become due. E) all of the above are considered to be acts of bankruptcy