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A merchant loaned P20,000.00 to a friend to start a business, the loan was originally made at 8% simple interest for 4 years. However, due to the pandemic the business operation is not stable, thus, the merchant was not able to pay the debt including its interest. The lender decided to extend the loan period for 6 years but, the merchant must pay equal payments at a new interest rate of 10% compounded semi-annually. How much is the equal payment at the end of 10 years?

A merchant loaned P20,000.00 to a friend to start a business, the loan was originally made at 8% simple interest for 4 years. However, due to the pandemic the business operation is not stable, thus, the merchant was not able to pay the debt including its interest. The lender decided to extend the loan period for 6 years but, the merchant must pay equal payments at a new interest rate of 10% compounded semi-annually. How much is the equal payment at the end of 10 years?

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 4MC: A ski company takes out a $400,000 loan from a bank. The bank requires eight equal repayments of the...
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2. A merchant loaned P20,000.00 to a friend to start a business, the loan was originally made at 8% simple interest for 4 years. However, due to the pandemic the business operation is not stable, thus, the merchant was not able to pay the debt including its interest. The lender decided to extend the loan period for 6 years but, the merchant must pay equal payments at a new interest rate of 10% compounded semi-annually. How much is the equal payment at the end of 10 years?
Transcribed Image Text:2. A merchant loaned P20,000.00 to a friend to start a business, the loan was originally made at 8% simple interest for 4 years. However, due to the pandemic the business operation is not stable, thus, the merchant was not able to pay the debt including its interest. The lender decided to extend the loan period for 6 years but, the merchant must pay equal payments at a new interest rate of 10% compounded semi-annually. How much is the equal payment at the end of 10 years?
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