A company borrowed from STB bank and FDB bank amounts of P600 000 and P550 000respectively for 3 months. At the time of borrowing, the prime rate was 9.5%. STB bankusually adds 1.5% to the prime rate to determine its fixed rate.Required:Determine the effective 3-month rate on the loan and effective annual rate, assuming that theloan is rolled over every 90 days throughout the year.

A company borrowed from STB bank and FDB bank amounts of P600 000 and P550 000respectively for 3 months. At the time of borrowing, the prime rate was 9.5%. STB bankusually adds 1.5% to the prime rate to determine its fixed rate.Required:Determine the effective 3-month rate on the loan and effective annual rate, assuming that theloan is rolled over every 90 days throughout the year.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 21MC: A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an...

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