You are looking at a one-year loan of $26,000. The interest rate is quoted as 11 percent plus two points. A point on a loan is 1 percent (one percentage point) of the loan amount. Quotes similar to this one are common with home mortgages. The interest rate quotation in this example requires the borrower to pay two points to the lender up front and repay the loan later with 11 percent interest. What rate would you actually be paying here? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Interest rate %

the rate of interest is 13.27%

Explanation:

The computation of the actual rate paid is shown below;

Present value is

= $26,000 - 2% of $26,000

= $26,000 - $520

= $25,480

The future value is

= $26,000 × (1 + 0.11)

= $28,860

Now as we know that

Future value = Present value × (1 + rate of interest)^number of years

$28,860 = $25,480 × (1 + rate of interest)

So, the rate of interest is 13.27%

Allocation rate = $622,000 / 10,000 hours = $62.2 per hour

Explanation:

Provided

Activity                          Total costs                       Cost Driver

Labor                             $480,000                           10,000 hours

Gas                                $32,000                              4,000 gallons

Invoices                         $110,000                              5,500 invoices

Total costs                     $622,000

Used as follows

Particulars               Lawn Dept.               Bush dept.               Plowing Dept.

Labor                       3,000 hours             1,200 hours              5,800 hours

Gas                          1,700 gallons            900 gallons             1,400 gallons

Invoices                   1,500 invoices          400 invoices           3,600 invoices

If labor hours are used even for non labor activities then

Overhead costs will be allocated in ratio of labor hours i.e. 3000:1200:5800

= 15:6:29 (Total = 50)

Total overheads = $622,000

Allocation rate = $622,000 / 10,000 hours = $62.2 per hour

Lawn Department = $62.2 3,000 hours = $186,600

Bush Department = $62.2   1,200 hours = $74,640

Plowing Department = $62.2 5,800 hours = $360,760

Allocation rate = $622,000 / 10,000 hours = $62.2 per hour