D. Luke Company is indeed of P3,375,00 to finance its building expansion program. Luke is currently negotiating a loan with Metro Bank which requires the company to maintain a compensating balance of 5% of the loan principal on deposit in a current account at the bank. Luke Inc. currently maintains a balance P50,000 in its current account . The current account earns interest of 4% per annum; the interest rate on the loan is 12% per annum. Questions: Based on the above data, answer the following A. What is the principal amount of the loan? a. P3,375,000 b. P3,325,000 c. P3,500,000 d. P3,480,000 41 B. What is the effective interest rate on the loan a.8% b.12.91% c.12.30% d. 12%

D. Luke Company is indeed of P3,375,00 to finance its building expansion program. Luke is currently negotiating a loan with Metro Bank which requires the company to maintain a compensating balance of 5% of the loan principal on deposit in a current account at the bank. Luke Inc. currently maintains a balance P50,000 in its current account . The current account earns interest of 4% per annum; the interest rate on the loan is 12% per annum. Questions: Based on the above data, answer the following A. What is the principal amount of the loan? a. P3,375,000 b. P3,325,000 c. P3,500,000 d. P3,480,000 41 B. What is the effective interest rate on the loan a.8% b.12.91% c.12.30% d. 12%

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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