Jones Co Borrowed Money That Is to Be Repaid in 12

question 95

Multiple Choice

Jones Co. borrowed money that is to be repaid in 12 years. So that the loan will be paid back at end of the 12^th year, the company invests $8,000 at end of each year at 5% compounded annually. The amount of the original loan was (use the tables in the handbook) :

• A)$127,336.80
• B)$70,905.60
• C)$127,636.80
• D)$70,950.60
• E)None of these

Recognize methods of service design that can reduce costs and enhance product value.

Perform decision analysis for product replacement or introduction decisions.

Apply decision tree analysis and expected monetary value (EMV) calculations to make-or-buy decisions.

Understand the role of configuration management in service and product management.

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Definitions:

After-Tax Cash Savings

The increase in cash flow that results after all applicable taxes have been deducted from the gross income.

Cost of Capital

The rate of return that a business must earn before generating value, taking into account the cost of funding the business through equity or debt.

Capital Structure

The combination of a corporation's long-term obligations, particular short-term liabilities, common stock, and preferred shares, employed to fund its general activities and expansion.

Net Present Value

A calculation used to determine the value of a future stream of income or expenses discounted back to the present value.