High School

SAMPLE: ABC company plans to produce a new product with an annual demand of 12500 units. The firm estimates that this demand will last for 5 years. It is known that the cost of the new product will be 30 TL and the selling price will be 50 TL. A new workstation is required for the production of the new product. The price of the new workstation is 500000 TL. ABC firm has decided to give 250000 TL in advance for the payment plan of this workstation, and 3 promissory notes for the remaining part over 25% interest. The nominal values and payment dates of the a bills are given below. Bill No. Nominal value Maturity. 1 150000 3 months 2 100000 4 months 3 X 6 months $ station will be able to be sold for 100000 TL at the end of the 5th year. Annual inflation rate 10%, from investment Since the expected interest rate is 20%, a- What will be the value of the 3rd promissory note? b- Should the company produce this product?

Answer :

a) To determine the value of the 3rd promissory note, we need to calculate the remaining amount to be paid after deducting the advance payment.

The price of the workstation is 500,000 TL, and the company has given 250,000 TL in advance. So, the remaining amount to be financed is 500,000 TL - 250,000 TL = 250,000 TL. Since the remaining amount will be financed over 25% interest, we need to calculate the interest amount for 6 months. The interest rate is 25%, which can be expressed as 0.25. So, the interest for 6 months would be 0.25 * 250,000 TL = 62,500 TL. Therefore, the total amount to be paid at the end of 6 months would be the principal (250,000 TL) plus the interest (62,500 TL), which is 312,500 TL. This would be the value of the 3rd promissory note.

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