Today is 1 January 2020. Jake just used $400,000 ($200,000 is from Jake’s own investment and $200,000 is raised by taking a 5-year loan) to purchase a cafe fran- chise. To operate this business, Jake needs to pay rent, maintenance costs, labour costs and loan repayments.
This package has an annual fee of $400. The package fee is paid by the end of January of each year during the following five year period (from 1 January 2020 to 31 December 2024).
UseGoal Seekto find the implied annual nominal rate of interest payable monthly (i.e.,j12) charged by MQ bank for this new loan package. Use a bar or column chart to compare the loan repayment amounts (including annual fees) of the original package and the new package over 5 years. Plot 60 monthly payments for both the original package and the new package. Should Jake switch to this package? Label this sheet as Part b.
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