Case Study 9B
Enea, a new entrepreneur has dreams of starting her own designer clothing store. She impressed an angel investor enough for them to give her a start-up loan.
The angel investor has given Enea a great opportunity on a loan of 6% compounded semi-annually. After just 2 years Enea’s business had saved up $80,654, enough to pay off the loan and interest from the angel investor. She can now look at other options from banks, investors, etc. to see if she got the best deal. She can also use this information for the future to decide what rate and frequency of compounding period may be the best option for her and her business.
a) What was the loan amount provided to her by the angel investor and what was the accumulated interest over the two-year period?
j= 6% t= 2 Years
m=2 FV= $80,654
The loan amount that Enea had received was $71,660.03.
The accumulated interest over the two-year period was $8,993.97.
With that being said, the loan amount provided to Enea was $71,660.03 and the accumulated interest on top of that was $8,993.97.
b) What rate, compounded monthly, would have resulted in the same accumulated debt?
5.93% compounded monthly would’ve resulted in the same amount of accumulated debt.
c) How long (rounded up to the next month) would it take for her debt to reach $100,000 if she does not repay any amount throughout the...