A Small Corporation Is Looking to Borrow $750,000 Is Choosing

question 72

Multiple Choice

A small corporation is looking to borrow $750,000 is choosing between the following alternatives:
Alternative A: pay the loan off over ten years with level annual payments of $97,100
Alternative B: pay off the loan at the end of 10-years using the sinking fund method where the sinking fund rate is j = 4% and annual interest payments are made assuming j = y.
Which of the following statements is/are true?
(I) If y = 0.03 for Alternative B then the corporation would chose Alternative A
(II) If y = 0.05 for Alternative B then the corporation would choose Alternative B

• A)Both
• B)I only
• C)II only
• D)Neither

Differentiate between elastic, inelastic, and unitary demand.

Apply the midpoint formula for calculating elasticity.

Recognize the importance of percentage changes in price and quantity in determining elasticity.

Analyze how elasticity affects total revenue.

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Definitions:

Juvenile Delinquency

Conduct in a child or adolescent characterized by illegal activities.

Homicide

The deliberate and unlawful killing of one person by another; murder.

High School

An education institution for students, typically between the ages of 14 and 18, that follows primary school and precedes higher education.

Juvenile Delinquency

Illegal or antisocial behaviors committed by a person under the age of majority.