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Author Question: A company collects 25 of its sales during the month of sale, 65 one month after the sale, and 10 ... (Read 121 times)

Ebrown

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on: Jul 10, 2018
A company collects 25 of its sales during the month of sale, 65 one month after the sale, and
  10 two months after the sale. The company expects sales of 50,000 in August, 80,000 in
  September, 90,000 in October, and 60,000 in November.
 
  How much money is expected to be
  collected in October?
  A) 90,000 B) 79,500 C) 22,500 D) 55,000

Question 2

Which of the following statements is TRUE if you increase your monthly payment above the required loan payment?
 
  A) The extra portion of the payment does not go to the principal.
  B) You can significantly increase the number of payments needed to pay off the loan.
  C) The extra portion of the payment increases the principal.
  D) You can significantly reduce the number of payments needed to pay off the loan.
Foundations of Finance ¦ Keown, Petty, Martin ¦ 9th Edition
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coyin

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Reply #1 on: Jul 10, 2018
Answer to Question 1

B

Answer to Question 2

Answer: D
Explanation: D) If you increase your monthly payment above the required loan payment, then the additional portion of the payment goes to the principal. The interesting thing about an extra payment above the required annuity is that it can appreciably reduce the number of payments needed to pay off the loan.


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