ABC Company acquired a loan from New Kensington Bank in the amount of $120,000 witha 8% interest rate. The loan will be repaid in exactly one year. A stipulation of the loanrequires ABC Company to keep a compensating balance of $25,000 in a New KensingtonBank checking account. What is the effective interest rate that ABC Company will pay?Please round to the second decimal place.10.11%9.67%8.00%6.62%

The question is related to Effective Interest rate. The details given are Amount of loan =…

Answered: ABC Company acquired a loan from New…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, the Hudson Company borrowed $190,000 to purchase machinery and agreed to pay 10% interest for six years on an installment note. Each note payment is $43,625 and is due on the last day of the year. What is the carrying value of the loan at the end of the first year? (Do not round intermediate calculations. Only round your final answer to the nearest dollar.) A. $146,375 B. $209,000 ○ C. $190,000 D. $165,375
:A company borrowed (100000$) from a bank and decided to repay this dept by a series payments (payment every 6 months for 5 years). The bank put a condition about the payment that every payment should increase by (1000$) each time. If the interest rate is (% 9) compounded quarterly, determine the amount of each payment?
On quesiton C: Johnson’s borrowed $282,000 at a(n) 9 percent annual interest rate on April 1 of the current year to expand its boat storage facility. The loan requires Johnson’s to pay the interest quarterly until the note is repaid in three years. Johnson’s paid quarterly interest on July 1 and October 1. Can you explain why the forumla is 282000*9%*2/12? I understand 282000*9% = 25380 (yearly interest) But why mulitpy by 2?
Bank A offers you a loan at 5.76% compounded 2 times a year. Bank B offers to loan you the same amount at 0.10% less than the rate offered by Bank A but compounded twice as often as the Bank A rate is. Which bank's loan should you accept? As your answer, enter the effective rate (in percent, to two decimal places at least) offered by the bank whose loan you should accept.
Current Attempt in Progress The Cullumber Bank requires borrowers to keep an 10 percent compensating balance. Gorman Jewels borrows $480,000 at a 8 percent stated APR. What is the effective interest rate on the loan? What is the effective interest rate (Round answer to 2 decimal places, e,g. 12.25%.)
n.c.
pls refer to the image attached, 1. suppose that you have the capacity to pay, would you rather borrow a loan that is amortized monthly, or one that is amortized quarterly? 2. what is your considerations when availing a loan? (quantitative or qualitative considerations) Discuss.
A company decides to obtain a small-business loan of $237,000. The financial institution from which the company borrows offers two options: a. Borrow $237,000 at 6% with monthly payments of $4,581.87 over 5 years. b. Borrow $237,000 at 7% with monthly payments of $2,751.77 over 10 years. Required: Record the issuance of an installment note payable under each option. Record the payments for the first and second month under each option. Determine the total amount of interest paid under each option over the full period of the note.
Determine the annual financing cost of a 1-year (365 day), $13,000 discounted bank loan at a stated annual interest rate of 9.0 percent. Assume that no compensating balance is required. Round your answer to two decimal places. %
On January 1, New Jersey Company borrowed $260,000 to purchase machinery and agreed to pay 7% interest for eight years on an installment note. Each note payment is doe on the last day of the year. What is the carrying value of the loan at the end of the second year? (Do not round intermediate calculations. Only round your final answer to the nearest dollar.) A. $214,685 B. $218,232 C. $172,917 D. $207,543
A $35,000 bank loan is to be repaid in equal yearly payment over 15 years at an effective annual interest rate of 5%. You did the calculation and found that your annual payment is $3372. What is the unpaid principal after you made your 8th payment? A. B. C. D. $17,115 $19,512 $14,599 $21,794
A customer repays a loan of 22,000 that has an effective annual interest rate of 5.15% by making payments of 2,200 at the end of each year for 11 years, followed by payments of 1,000 at the end of each year for as long as necessary, until a final payment of X of less than 1,000, made one year after the last regular payment of 1,000, repays the loan. Find X. a) 208 b) 295 c) 381 d) 468 e) 555

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