Answered: Andy borrowed P20,000 with interest at…

Andy borrowed P20,000 with interest at 4% compounded quarterly. He agreed to pay P1,500 at the end of each three months. How long must he pay? What is the size of the concluding payment?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 1EA: Halep Inc. borrowed $30,000 from Davis Bank and signed a 4-year note payable stating the interest...

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

Andy borrowed P20,000 with interest at 4% compounded quarterly. He agreed to pay P1,500 at the end of each

three months. How long must he pay? What is the size of the concluding payment?

Expert Solution

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Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

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Step 1: Calculating time period for repayment of loan

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Step 2: Using excel NPER function to calculate time

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Step 3: Loan amortization schedule is given below

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