5 1. A man borrows money from a bank which uses a simple discount rate of 14%. He signs a promissory note promising topay P500 per month at the end of 4th, 6th , and 7th months, respectively. Determine the amount he received from thebank.2. Mr. W borrowed P2,000 from Mr. Y on June 1, 1928 and P500 on June 1, 1930. Mr. W paid P500 on June 1, 1931, P400on June 1, 1932, and P700 on June 1, 1933. If money is worth 5% compounded annually, what additional payment shouldMr. W pay on June 1, 1936 to discharge all remaining liability?3. The Philippine Society of Mechanical Engineers is planning to construct its own building. Two proposals are beingconsidered:a. The construction of the building now to cost P400,000.b. The construction of a smaller building now to cost P300,000 and at the end of 5 years, an extension to be addedto cost P200,000.Which proposal is more economical if interest is 20%, depreciation is disregarded and by how much?4. Juan de la Cruz borrowed P2,400 at 1% per month payable in 24 equal end-of-the-month payments. How much of theloan remains unpaid immediately after he has paid the 12th payment?5. Two years ago, the rental for the use of equipment and facilities was paid 5 years in advance, with the option to renewthe rent for another 5 years by payment of P15,000 annually at the start of each year for the rental period. Now,the lessor asks the lessee, if it could be possible to prepay the rental that will be paid annually in the renewed 5-year period. If the lessee agrees, what would be the fair payment to be made to the lessor. USE:i = 8%

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College Accounting, Chapters 1-27

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Publisher:HEINTZ, James A.

Chapter17: Accounting For Notes And Interest

Section: Chapter Questions

Problem 1CE

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A man borrows money from a bank which uses a simple discount rate of 14%. He signs a promissory note promising to pay P500.00 per month at the end of 4th, 6th, and 7th month respectively. Determine the amount of money that he received from the bank. a. P1403.68 c. P1102.37 b. P1340.38 d. P1030.28
A man borrows money from a bank which uses a simple discount rate of 14%. He signs a promissory note promising to pay P500 per month at the end of the 4th, 6th and 7th months, respectively. Determine the amount he received from the bank.
On March 1, 1996 Mr. Almagro obtains a loan of P1500 from Mr. Abella and signs a note promising to pay the principal and accumulated simple interest at the rate of 5% at the end of 120days. On May 15, 1996, Mr. Abella discounts the note at the bank whose discount rate is 6%. What does he receive?
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9. Liam borrowed $12,500 for 5 months from a bank using a 2% discount note. a) How much interest did Liam pay the bank for the use of its money? b) How much did he receive from the bank? c) What was the actual rate of interest he paid?
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College Accounting, Chapters 1-27

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9781337794756

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HEINTZ, James A.

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College Accounting, Chapters 1-27

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ISBN:

9781337794756

Author:

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A man borrows money from a bank which uses a simple discount rate of 14%. He signs a promissory note promising to pay P500 per month at the end of 4th, 6t , and 7th months, respectively. Determine the amount he received from the bank.