Today is July 1 and Hilda Company will need a fixed interest rate loan of P1,200,000 for 6 months starting on October 1. The bank quotes an FRA rate of 8% for the loan. If the actual rate on October 1 is 10%, how much interest in pesos, should Hilda Company pay the bank (actual cash outflow)?

Today is July 1 and Hilda Company will need a fixed interest rate loan of P1,200,000 for 6 months starting on October 1. The bank quotes an FRA rate of 8% for the loan. If the actual rate on October 1 is 10%, how much interest in pesos, should Hilda Company pay the bank (actual cash outflow)?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

See similar textbooks

Related questions

Q: National Co. needs to borrow P300,000 for the next 6 months. The company has a line of credit with a…

A: Introduction: Borrowing is quite prevalent in adulthood. Almost everyone will need a loan at some…

Q: An automobile loan of $15,000 at 12% APR compounded monthly for 36 months requires equal monthly…

A: Repayment of loan is made in installments of fixed amount which include interest as well as portion…

Q: A customer takes out a loan of $150,000 on January 1, with a maturity date of 36 months, and an…

A: Interest on loan:-It is the rate levy on the initial amount of loan and this is the additional…

Q: person borrows $2,850 on a bank credit card at a nominal rate of 18% per year, which is actually…

A: a. Annual Percentage Yield APY =[ (1+r)^n - 1] APY = [(1+0.015)^12-1] APY…

Q: the effective interest rate if the actual interest rate 3 months from now is 8%

A: Effective Interest Rate: Effective interest rate is the real return on any interest paying…

Q: Tokyo Corporation must pay its supplier P500,000. Tokyo Corp's bank has advertised a 270-day loan…

A: Compensating Balance: Compensating balance means the amount that a borrower deposits in the…

Q: You want to lend $12,000 as a bank deposit in a private bank with an interest rate 3 % per month.…

A: The worth of money changes with time. Therefore, the time value of money explains the worth of money…

Q: ABC Company enters into an IRG arrangement with Ch-bank for a 9 months, P800,000 loan starting 3…

A: Loan is a value which is borrowed from other sources like banks for the period and this amount is…

Q: Today is July 1 and Hilda Company will need a fixed interest rate loan of P1,200,000 for 6 months…

A: The investors will invest to earn profits from the investment. The investment can be made in shares,…

Q: What is the outstanding balance of the loan after the 2nd year

A: Compound interest is the amount of interest charged on interest. In this method the interest…

Q: On December 31, 2021, Oregon Bank recorded an investment of P5,000,000 in a loan granted to a…

A: Given investment value = P5,000,000

Q: Garantea Company enters into an IRG arrangement with Metrobank for 9 months, P800,000 loan starting…

A: Loan is a value which is borrowed from other sources like banks for the period and this amount is…

Q: ABC’s bank offered a loan with conditions of a P5,000,000 face amount, 6-month term, 4% interest…

A: Effective annual interest rate is the interest rate which an investor expects in a year after taking…

Q: A bank pays simple interest at the rate of 8% per year for certain deposits. If a customer deposits…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: National Co. needs to borrow P300,000 for the next 6 months. The company has a line of credit with a…

A: The company does not have sufficient compensating balance so it will have to borrow a sum greater…

Q: bank is offering aloan of $25,000 with a nominal interest rate of 18% compoundedmonthly, payable in…

A: Loan amount (PV) = $ 25000 Annual interest rate = 18% Monthly interest rate (r) = 18%/12 = 1.50%…

Q: require an annual fee of 50,000 and an interest of 1% per month. On March 1, 2020, 3,000,000 is used…

A: Interest on remaining period on purchase value in credit line Purchase value = 30,00,000 used upto…

Q: Dina placed Php 18,000 in a 240-day term deposit earning 8.5% per annum. How much will the bank pay…

A: Note: Since here nothing is being mentioned about the nature of interest, it is assumed to be…

Q: On December 31, 2019, Panda Bank recorded an investment of P5,000,000 in a loan granted to a client.…

A: Impairment losses arise when the present value is less than the carrying value. For example:…

Q: A consumer loan of P80,000 is obtained that is due 3 months from now. If interest rate is 8%…

A: The borrower is required to pay the lender the initial sum borrowed and the interest on the loan.…

Q: Today is July 1 and Barow Company will need a fixed interest rate loan of P1,200,000 for 6 months…

A: A fixed interest loan rate is a rate in which interest rate did not fluctuate for the period of…

Q: July 1, Bee Company will need a fixed interest rate loan of P1,200,000 for 6 months starting on…

A: A company can borrow money from the bank if the company needs money for the business. The bank will…

Q: It is now January 1, 2018. You plan to make 5 deposits of $200 each, one every 6 months, with the…

A: Future value is the expected value of an investment at a future date at given rate of return. given:…

Q: Z Corporation has a cash balance of P500,000 at the beginning of the month. Based on its forecast…

Q: Ghana Company enters into an IRG arrangement with Meterbank for 9 months, P800,000 loan starting 3…

A: IRG means interest rate guarantees. This is an option contract which helps an individual or a firm…

Q: A loan of $1575 taken out on June 7 requires three payments. The first payment is due on July 7. The…

A: The focal date of the loan is 7th June. The first payment is due on 7th July, the second payment is…

Q: Assume that a bank has lent a firm a P 200,000 for 60 days at 10% interest. The loan is discounted,…

A: Principal amount (P) = P 200,000 Interest for 60 days (I) = P200,000 x 10% x 60/360 days = P3,333…

Q: A local bank is advertising that it pays depositors 6% compounded monthly, yielding an effective…

A: Simple interest is calculated by multiplying principal into rate of interest for the given period of…

Q: Cerise Company would record a note payable of_____, if the terms of the loan with a bank are as…

A: Present value (PV) of an future amount is equal amount of such at present, discounted at a…

Q: SureWin Company owes an amount of debt to a bank and the bank proposed the following annual payments…

A: The Present Value of a cash flow series: The present value of a cash flow series is calculated as…

Q: Tokyo Corporation must pay one of its suppliers P765,000. The bank requires a 15 percent…

A: Banks and financial organizations often lend money to various businesses, clients, and investors in…

Q: What lump sum of money must be deposited into a bank account at the present time so that $600 per…

A: Present value refers to the current valuation for a future sum. Investors determine the present…

Q: On December 31, 2021, Oregon Bank recorded an investment of P5,000,000 in a loan granted to a…

A: Solution- PV of principal (5,000,000 x .75) =3,750,000 PV of…

Q: Utah Inc. would need cash of P5,000,000 for a period of 3 months f nk. The latter offered 12%…

A: Simple effective cost is overall cost of loan including the origination cost and interest.

Q: Company is considering to establish a line of credit with a local bank to make up for the cash…

A: Solution: Expected cost of establishing a line of credit: Particulars Amount Committed Cost…

Q: A loan of 20,000 is to be repaid as follows. Payments of p are to be made at the end of each month…

A: Amount of Loan = 20000 Principal amount to be paid in total 96 installment = 20000-5400 = 14600…

Q: On December 31, 2021, Cholo Bank recorded an investment of P 5,000,000 in a loan granted to a…

A: Annual interest = Loan amount x interest rate x no. of year = P5,000,000 x 10% x 1 year = P500,000

Q: a. If the bank compounds interest annually, how much will you have in your account on January 1,…

A: Comment: The Question is Multipart, so SME will answer only three subparts. For the rest of the…

Q: A bank makes a loan with the following characteristics: monthly payments for 10 years, with an APR…

A: PV: It is the current worth of cash flows that are expected to happen in the future.

Q: You want to lend $10,000 as a bank deposit in a private bank with an interest rate 3% per month. You…

A: Amount lend as deposit - $10,000 Interest rate - 3% per month Period - 6 months

Q: If a nine month term deposit at a bank earn a simple interest rate of 9% per annum, how much should…

A: Term deposit is a way in which the person locks his amount or we can say sum of money for a specific…

Q: To establish a "rainy day" cash reserve account, a certain company deposits $12,000 of its profit at…

A: Amount of deposits =12000 interest rate =1.95 compounding quarterly After 4years After 5.5 years

Q: ABC’s bank offered a loan with conditions of a P5,000,000 face amount, 6-month term, 4% interest…

A: The annual effective rate is the actual rate of interest which is implied on the principal amount.…

Question

Definition Definition

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1 Introduction

VIEW

Step 2 calculation of interest payment

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an annual interest rate of 11%. If 6 months have passed since note establishment, what would be the recorded interest figure at that time? A. $7,150 B. $65,000 C. $14,300 D. $2,383
If 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?
Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the year
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
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?
You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.