Answer to Question #94797 in Accounting for Tusiime

Question

Musa has $6000 starting capital for money leading business. He hopes to lend out a standard $1000 per individual, lend up to three borrowers per day and work for 20 days in first 2 month and increase to as many borrowers as capital can allow during the first year. The maximum loan repayment period is 24 working days. The loan interest rate is $200 per $1000 for the entire loan period. The borrower will be required to repay the loan in spread installments of $500 per day, beginning the following day. Musa estimates the risk of bad loans to be 5% per month of the total investment and his business will not be insured.

Required
a. Projected total monthly interest
b. Projected monthly gross profit
c. Projected monthly net profit
d. How many borrowers can Musa lend each month from the third month?
e. Projected profits or loss statement
f. Statement of business financial position or trajectory

Answer 1

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