Find the amount to be repaid. How much will the interest be at the repayment date if the following time factors are used? A. Bankers rule B. Exact simple interest C. Approximate/360 D. Approximate/ 365

Find the amount to be repaid. How much will the interest be at the repayment date if the following time factors are used? A. Bankers rule B. Exact simple interest C. Approximate/360 D. Approximate/ 365

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

Joseph borrowed P5,000.00 on November 2,2015 from Arthemus, which is to be paid on May 21,2016 at 6.2% simple interest per year. Find the amount to be repaid. How much will the interest be at the repayment date if the following time factors are used?

A. Bankers rule

B. Exact simple interest

C. Approximate/360

D. Approximate/ 365

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