You Just Borrowed $15,000 from a Finance Company to Start

question 88

Essay

You just borrowed $15,000 from a finance company to start a business. If you are required to repay $16,800 interest and principal in one year, and inflation is 4.0%, what is the expected real rate of interest?

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Definitions:

Merchandiser

A business entity engaged in selling goods directly to consumers or other businesses.

Cost Flow

The manner in which costs move through a firm, from initial acquisition of raw materials to final sale of finished goods.

Single-Step Income Statement

An income statement format that lists all revenues and then deducts all expenses to find the net income with only one subtraction.

Multiple-Step Income Statement

A detailed income statement that separates operational revenue and expenses from non-operational ones, presenting a clear view of a company’s operational efficiency.