Question

1) Suppose that South Pangean debt is $100 million and the interest rate it pays on that debt is 4 percent. That means its interest payments must be $___million.

2) If South Pangean expenditures are $30 million without interest payments, that means its expenditures with interest payments are $___million.

Answer 1

Answer and Explanation:

The computation is shown below:

a. The interest payment is

= 4% of $100 million

= $4 million

b. The interest expense without interest payment is

= Expenditures incurred without interest payment + interest payment

= $30 million + $4 million

= $34 million

The same should be considered and relevant