A local financing bank granted a car loan to a man who agreed to pay a rate of interest of 25%. Interest in this type of transaction is to be deducted from the loan at the time the money is released. At the end of one year, the borrower will have to pay the same amount that is stated in his loan application. What actual interest did the financing bank charge him?
Q: Joshua borrowed $500 for one year and paid $50 in interest. The bank charged him a service charge of…
A: Annual Percentage Rate (APR)= (2 * N * FC) / [ (P * (N+1)]
Q: A man borrowed ₱180 000 from a bank payable in two years. The bank discounted the loan by ₱30 000.…
A: Theoretical interest rate is an interest rate which is calculated on amount borrowed whereas actual…
Q: You go to the loan fund of the company where you work and find that they have an emergency fund…
A: Given, that the payments in month 3,6,9,12 is double than the normal payments in other months.…
Q: Reya paid Php 9,250 on a loan made 6 months before at 12% simple interest. Find the interest…
A: Simple interest is simple interest without any compounding that means no interest on interest…
Q: Jane requested a loan from a bank amounting to P186,980 to continue her small business. But she only…
A: A loan is an arrangement in which borrower receives money from the lender which is to be repaid…
Q: 2. Janica received a loan from her bank for Php 4,085 for a period of one year. The interest rate is…
A: Interest on Loan: The expense of borrowing money is represented by interest. When loan disbursements…
Q: On March 1, Minnerly Motors obtains a business loan from a local bank. Theloan is a $25,000…
A: The formula to compute interest charge as follows:
Q: o help open up a jewelry store, Kaitlin borrowed money from her credit union. She took out a…
A: Time value of money is used to calculate the monthly instalments, rate of interest, total amount to…
Q: On June 30, Jeff, who uses the cash method of accounting, borrowed $25,000 from a bank for use in…
A: Loan is the amount of money that is being borrowed from some person and on which interest payments…
Q: Mr. Dalisay applied for a bank loan with a principal of P150,000 to be paid after five years in…
A: The amount of proceedings will be discouraged value of money today of future principal amount to be…
Q: Jackie obtained a new credit card from a national bank, MBNA with a stated rate of 18% per year,…
A: The Compound interest is simply the interest on interest. It is the interest that is given on both…
Q: The Corner Bar & Grill is in the process of taking a 5-year loan of $50,000 with First Community…
A: Amortization Schedule:-It is a schedule prepared for the loan installments which divide into the…
Q: e effective rate of interest of the loan?
A: Effective interest rate is calculated as follows; r = (1 + in)n -1 wherer - effective annual ratei -…
Q: Suppose an engineer purchases a home and secures a loan of ₱2.5M from a commercial bank for 20 years…
A: Introduction Loan may be defined as that type of debt which is incurred by an individual or a…
Q: Suppose that you owe $2500 on a credit card that charges 18% APR and you pay either the…
A: The number of months it will take to pay off the loan can be seen from the amortization table.
Q: Homer promises to pay $1,000 at the end of 6 months in obtaining a loan from a banker who charges 6%…
A: Loan amount (PV) is $1,000 Loan Period is 6 months Interest Rate charged in advance is 6% (We…
Q: Jason borrowed $2,500 on March 1 from a bank and promised to pay back the money in 90 days at 6%…
A: Amount borrowed “P” = $2500 Number of days “n” = 90 Stated rate of interest = 6%
Q: In June 2002, John an employee of Bank of America received a loan of $4.0 million to purchase an…
A: John’s will be charged to tax for difference between prescribed rate and concessional interest rate…
Q: If an entrepreneur applies for a loan amounting to ₱ 500,000 in a bank, the simple interest of which…
A: Simple interest = Principal * Rate of interest*Time Rate of interest = Simple…
Q: Jane requested a loan from a bank amounting to P405,630 to continue her small business. But she only…
A: Given: Maturity Value "M" = P405630 Proceeds = 83.84%*P405630 = P340080.192 Number of years = 12…
Q: an employee obtain a loan of 10000 at the rate of 6% compounded annually in order to repair his…
A: Amortized loan refers to a loan where the principal amount of the loan is paid over the life of the…
Q: A person deposits an amount of 20,000 dinars in a financial institution with compound interest, the…
A: Amount of Deposit = 20,000 Interest Rate (r) =1% Years (n) =12
Q: jackal promises to pay 1000 at the end of 6 months in obtaining a loan from a banker b who charges…
A: Effective interest rate is the interest rate that is earned or paid after considering the…
Q: Nesrin, purchased a new car for $9,420, paying $3,000 down payment and agreeing to 12 monthly…
A: Credit rate: The amount charged for a credit loan or purchase is usually represented as a…
Q: A loan shark made a loan of 5,000 to be repaid with 5,500 dollars at the end of the two months. What…
A: Simple interest = Principal * Interest rate percentage * period Given: Loan value = 5000 Amount to…
Q: You purchased a second-hand car worth ₱ 420,000 if paid in cash. You were able to negotiate with a…
A: given, price of car = P420,000 downpayment = 20% n = 4 years r=1.5% per month m=12
Q: A bank employee passed the ICWA examination and his salary was raised by P30,000 starting from the…
A: Annunuity per year is P30,000 Interest rate compounded semi annually is 6% Time period is 20 years…
Q: Jane requested a loan from the bank amounting to 312,870 to continue her small business. But she…
A: Requested loan amount is 312,870 Loan amount is 84.68% of requested amount Time period is 8 years…
Q: Bill Casler bought a $9000, 9-month certificate of deposit (CD) that would earn 8% annual simple…
A: Solution:- Given, Bill Casler bought = $9,000 9-month certificate of deposit (CD) that would earn 8%…
Q: A man has purchased a new automobile. He wishes to set aside enough money in a bank account to pay…
A: When a number of equal payments are made at equal intervals, it is called annuity. If the payments…
Q: A lending company charged its client P2,750 on a loan of P15,800 for 2 years and 3 months. What…
A: The rate of interest charged can be calculated with the help of simple interest function
Q: An automobile financier claims to be lending money at simple interest, but he includes the interest…
A: Following is the answer to the question
Q: A man borrows money from a bank which uses a simple discount rate of 14%. He signs a promissory note…
A: “Since you have asked multiple questions, we will solve the one question for you. If you want any…
Q: The Fly-by-Night finance company advertises a “bargain 6%plan” for financing the purchase of…
A: Effective interest rate is the rate that is paid to a loan or earned on an investment as a result of…
Q: A man borrowed Php 8000 from RCBC and agreed to pay the loan at the end of 9 months. The bank…
A: AMount borrowed is Php 8000 Time period is 9 months Amount received after discount is Php 5000 To…
Q: You are considering purchasing a lot adjacentto your laundry business to provide adequate parking…
A: Initial Loan amount=$ 75,000 Period % of initial amount to be repaid Repayment amount ($) 1 14…
Q: Determine the APY you would pay using an equation. The APY paid would be % per year.
A: Annual percentage yield (APY) refers to a yield or real interest rate which an investor is expect…
Q: In August 2008, a car manufacturing company was offering the choice of a 3.3% loan for 72 months,…
A: A study that proves that the future worth of the money is lower than its current value due to…
Q: You bought a used car for $4,000.00 at a nominal interest rate of 6%. You agreed to pay for the car…
A: The loan is a value that is borrowed from external sources like banks and this amount is repaid…
Q: At the beginning of a month, a customer owes a credit card company $8480. In the middle of the…
A: A credit card allows the holder to spend for their needs and allows them to pay at a later date…
Q: Johan wants to buy a car on hire purchase for N$49000 at the rate of 12% p.a. repayable using…
A: Payment of loan installments are based on the concept of compounding and time value of money. Here…
Q: A credit cooperative recently offers a 36-month loan at 4.15% compounded monthly for typhoon victim…
A:
Q: Johan wants to buy a car on hire purchase for N$75000 at the rate of 10% p.a. repayable using…
A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…
Q: A woman decides to purchase a $23000 car, and makes down payment of $3500. She arranges to borrow…
A:
Q: You have just been hired as a loan officer at a national bank. Your first assignment is to calculate…
A: Given: Present value = $40,000 Interest rate = 6% Years = 1(3/4)
Q: A person borrowed some money and agreed to pay off the loan by making monthly payments of $75 for…
A: Given: Monthly payment =$75 Interest rate = 9% Years = 3 Compounding is in years.
Q: Engr. De Robles borrowed Php 10,000 from a bank and promised to pay the amount for 1 year. But he…
A: Proceeds = Php 9600 Discount = Php 400 Borrowed amount (P) = Php 10000 n = 1 year Let the discount…
Q: A man borrows money from a bank which uses a simple discount rate of 14%. He signs a promissory note…
A: A promissory note refers to a financial instrument which contains a promise that one party will pay…
Q: A bank teller negotiated a purchase price of $22,350 for a car. In addition to the purchase price,…
A: We first need to figure out the total cost of the car and then the amount of loan. We will then use…
MANUAL SOLUTION AND CASH FLOW DIAGRAM
Step by step
Solved in 2 steps with 1 images
- Homeland Plus specializes in home goods and accessories. In order for the company to expand its business, the company takes out a long-term loan in the amount of $650,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 8.5%. Each year on December 31, the company pays down the principal balance by $80,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.McMasters Inc. specializes in BBQ accessories. In order for the company to expand its business, they take out a long-term loan in the amount of $800,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 9%. Each year on December 31, the company pays down the principal balance by $50,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.Cost of Bank Loan On March 1, Minnerly Motors obtains a business loan from a local bank. The loan is a 25,000 interest-only loan with a nominal rate of 11%. Interest is calculated on a simple interest basis with a 365-day year. What is Minnerlys interest charge for the first month (assuming 31 days in the month)?
- Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank in the amount of $500,000. The terms of the loan are 2.9% annual interest rate and payable in 8 months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on October 20, and the entry for payment of the short-term note and final interest payment on May 20. Round to the nearest cent if required.Pickles R Us is a pickle farm located in the Northeast. The following transactions take place: A. On November 6, Pickles borrows $820,000 from a bank to cover the initial cost of expansion. Terms of the loan are payment due in six months from November 6, and annual interest rate of 3%. B. On December 12, Pickles borrows an additional $200,000 with payment due in three months from December 12, and an annual interest rate of 10%. C. Pickles pays its accounts in full on March 12, for the December 12 loan, and on May 6 for the November 6 loan. Record the journal entries to recognize the initial borrowings, and the two payments for Pickles.Whole Leaves wants to upgrade their equipment, and on January 24 the company takes out a loan from the bank in the amount of $310,000. The terms of the loan are 6.5% annual interest rate, payable in three months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on February 24, and the entry for payment of the short-term note and final interest payment on April 24. Round to the nearest cent if required.
- A ski company takes out a $400,000 loan from a bank. The bank requires eight equal repayments of the loan principal, paid annually. Assume no interest is paid or accumulated on the loan until the final repayment. How much of the loan principal is considered a current portion of a noncurrent note payable in year 3? A. $50,000 B. $150,000 C. $100,000 D. $250,000Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?Mohammed LLC is a growing consulting firm. The following transactions take place during the current year. A. On June 10, Mohammed borrows $270,000 from a bank to cover the initial cost of expansion. Terms of the loan are payment due in four months from June 10, and annual interest rate of 5%. B. On July 9, Mohammed borrows an additional $100,000 with payment due in four months from July 9, and an annual interest rate of 12%. C. Mohammed pays their accounts in full on October 10 for the June 10 loan, and on November 9 for the July 9 loan. Record the journal entries to recognize the initial borrowings, and the two payments for Mohammed.
- Sub-Cinema Inc. borrowed $10,000 on Jan. 1 and will repay the loan with 12 equal payments made at the end of the month for 12 months. The interest rate is 12% annually. If the monthly payments are $888.49, what is the journal entry to record the cash received on Jan. 1 and the first payment made on Jan. 31?Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the end of four months? A. $2,600 B. $7,800 C. $137,800 D. $132,600If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the next eight years, how much will be accounted for as a current portion of a noncurrent note payable each year?