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Concept introduction:
Present Value:
Present value of money means the present or current value of a future cash flow at a given rate of interest or return.
Future Value:
The future value is the value of present cash flow at specified time period and at specified
Requirement 1:
We have to determine the amount to be borrowed.
Concept introduction:
Present Value:
Present value of money means the present or current value of a future cash flow at a given rate of interest or return.
Future Value:
The future value is the value of present cash flow at specified time period and at specified rate of return.
Requirement 2:
We have to determine the amount to be borrowed.
Concept introduction:
Present Value:
Present value of money means the present or current value of a future cash flow at a given rate of interest or return.
Future Value:
The future value is the value of present cash flow at specified time period and at specified rate of return.
Requirement 3:
We have to determine the amount to be borrowed.
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- If you borrow $1000.00 on May 1, 2019, at 12% compounded semi-annually, and interest on the loan amounts to $103.76, on what date is the loan due?arrow_forwardPROBLEM: EB Bank granted a loan to a borrower on January 1, 2019. The interest on the loan is 10% payable annually starting December 31, 2019. The loan matures in three years on December 31, 2021. The principal amount of loan is P3,500,000. In addition, direct origination cost incurred amounted to P70,000, and indirect origination cost incurred, P35,000. Finally, origination fee charged against the borrower amounted to P238,000. a) Compute for the carrying amount of the loan receivable on January 1, 2019. b) The new effective rate after considering the origination fees and costs incurred is 12%. Prepare a table of amortization for the loan receivable. c) Prepare journal entries for 2019 and 2021.arrow_forwardIf you borrow $ 18,500 at an annual interest rate of 7.5% on September 14, 2019, and pay the loan back on January 12, 2020. What are the proceeds of the loan using the banker’s rule at the approximate time? 18,004.83 18,045.20 17,069.79 18,956.16arrow_forward
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