Answered: e effective rate of interest of the…

Business

Finance

e effective rate of interest of the loan?

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...

See similar textbooks

Related questions

Q: You have just been hired as a loan officer at a national bank. Your first assignment is to calculate…

A: A loan refers to a contract between two parties where one party lends a sum to the other party on…

Q: A particular credit card calculates interest using the unpaid balance method. The monthly interest…

A: Interest is an amount charged for borrowing or lending money. Interest is calculated based on the…

Q: Assume that you start with a balance of $3900 on your credit card.During the first month you charge…

A: Here, Balance on Credit Card is $3900 APR is 29% Charges for first Month is $400 Charges for Second…

Q: A borrower has two alternatives for a loan: (1) issue a $360,000, 75-day, 6% note or (2) issue a…

A: Notes payable is a promise to pay certain amount by the buyer to the seller on a date and interest…

Q: You have just been hired as a loan officer at a national bank. Your first assignment is to calculate…

A: Data given: PV=Loan amount=$30000 Rate=6% Monthly rate=6%/12=0.005 N= 4 years nper=4*12=48…

Q: A person borrows $3,000 on a bank credit card at a nominal rate of 18% per year, which is actually…

A: Annual Percentage Rate It the total interest paid each year which is before consideration for the…

Q: how long will it take for teh account to be paid off?

A: Formula for loan amortization A= [i*P*(1+i)^n]/[(1+i)^n-1] Formula for calculating number of…

Q: A credit card holder purchased an item P6,000 on credit with a monthly interest rate of 3% and 5%…

A: To find the remaining balance we need to subtract the amount that is paid and it will be paid on the…

Q: Mr samuel approached the arnett national bank for a 15,000 loan to purchase vehicle the bank charges…

Q: You have asked Raider Bank for a $20,000 signature loan, where you will be charged 1% per month…

A: It seems there might be a mistake or some missing information in this question. Let me clarify a few…

Q: You have just been hired as a loan officer at a national bank. Your first assignment is to calculate…

A: The question is based on the concept of Financial Management. Equal periodic payment can be…

Q: A credit card bill shows a balance due of $1200 with a minimum payment of $24 and a monthly interest…

A: Calculate the effective annual rate (EAR) as follows:

Q: A payday lender lends money on the following terms: “If I give you $100 today, you will write me a…

A: An interest method in which current interest is computed by multiplying the interest rate by the sum…

Q: A man borrows money from a bank which uses a simple discount rate of 14%. He signs a promissory note…

A: Note: All the Given Options are incorrect as per the details mentioned in the question. So we will…

Q: You have just been hired as a loan officer at a national bank. Your first assignment is to calculate…

A: Periodic payment refers to an amount that is paid at every period by the borrower to the lender for…

Q: Gene McDonald's bank granted him a single-payment loan of $5,000 for 90 days at 9% ordinary…

A: A fundamental method of calculating interest in finance is called simple interest. It is calculated…

Q: You have just been hired as a loan officer at a national bank. Your first assignment is to calculate…

A: When a person takes a loan then in such a case the lending bank usually requires that person to pay…

Q: following monthly balance, calculate the minimum monthly payment. Minimum Payment Balance…

A: Minimum monthly payment means that payment which is required to be paid on monthly basis for a…

Q: A particular credit card calculates interest using the unpaid balance method. The monthly interest…

A: Credit card is type of loan facility which is offered by banks and other financial institutions.…

Q: A credit card company determines a card holder's minimum monthly payment by adding all new interest…

A: The total outstanding balance as of November 10th is $1,376 (van repairs ($654) + equipment…

Q: 1. Terry Bergolt's bank granted him a single-payment loan of $4,400 at an interest rate of 6% exact…

A: Exact interest is the interest calculated on the basis of the exact number of days between the date…

Q: A company lends its supplier $154,000 for 3 years at a 10% annual interest rate. Interest payments…

A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…

Q: Jami's Home Repair borrows $6,000, at 13.75% interest, for 330 days. Use the exact interest method…

A: Principal Amount = p = $6000 Interest rate = r = 13.75% Time = t = 330 days

Q: Determine the interest to be deducted in advance if P 50 000 is due after 6 months with a discount…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: You have just been hired as a loan officer at a national bank. Your first assignment is to calculate…

A: Given: Present value = $40,000 Interest rate = 6% Years = 1(3/4)

Q: A borrower has two alternatives for a loan: (1) issue a $420,000, 30-day, 6% note or (2) issue a…

A: Interest expense is the interest to be paid on borrowings done. It is calculated by considering rate…

Question

A man approaches a Loan Agency for P100,000 to be paid in 24 monthly instalments. The agency advertises an interest rate of 1.5% per month. They proceed to calculate the amount of his monthly payment as follows:

Amount requested P100,000

Credit investigation P500

Credit risk insurance P1,000

Total P101,500

Interest = P101,500(24)(0.015) = P36,540

Total owed = P36,540 + P101,500 = P138,040

Payment = P138,040 / 24 = P5,751.67

What is the effective rate of interest of the loan?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

You have asked Raider Bank for a $20,000 signature loan, where you will be charged 1% per month informs you that the terms of the loan requires you to make monthly payments. What is the Excel F your daily payments that will be drawn from your account automatically? 200/12 PUNTO 145 and 200001
You have just been hired as a loan officer at a national bank. Your first assignment is to calculate the amount of the periodic payment (in $) required to amortize (pay off) the following loan being considered by the bank (use Table 12-2). (Round your answer to the nearest cent.) LoanPayment PaymentPeriod Term ofLoan (years) NominalRate (%) Present Value(Amount of Loan) $ 2,582 every month 1 1 4 6 $30,000 loan payment wrong needs correction
You have just been hired as a loan officer at a national bank. Your first assignment is to calculate the amount of the periodic payment (in $) required to amortize (pay off) the following loan being considered by the bank (use Table 12-2). (Round your answer to the nearest cent.) LoanPayment PaymentPeriod Term ofLoan (years) NominalRate (%) Present Value(Amount of Loan) $ every month 1 1 4 6 $30,000
A borrower has two alternatives for a loan: (1) issue a $360,000, 75-day, 6% note or (2) issue a $360,000, 75-day note that the creditor discounts at 6%. Assume a 360-day year. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Calculate the amount of the interest expense for each option. Round your answer to the nearest dollar. $ ________________________ Determine the proceeds received by the borrower in each alternative. Round your answers to the nearest dollar. (1) $360,000, 75-day, 6% interest-bearing note: $___________________________ (2) $360,000, 75-day note discounted at 6%: $ _________________________
Wade Ellis buys a new car for $16,882.14. He puts 10% down and obtains a simple interest amortized loan for the rest at the nearest cent.) (a) Find his monthly payment. X (b) Find the total interest. (c) Prepare an amortization schedule for the first two months of the loan. Payment Number Principal Portion Total Payment 0 1 2 LA पण Interest Portion पण A X X पण $ LA Balance 111% interest for four years. (Round your answers to
A borrower has two alternatives for a loan: (1) issue a $420,000, 30-day, 6% note or (2) issue a $420,000, 30-day note that the creditor discounts at 6%. Assume a 360-day year. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Calculate the amount of the interest expense for each option. Round your answer to the nearest dollar. $ fill in the blank 2 for each alternative. Determine the proceeds received by the borrower in each alternative. Round your answers to the nearest dollar. (1) $420,000, 30-day, 6% interest-bearing note: $ fill in the blank 3 (2) $420,000, 30-day note discounted at 6%: $ fill in the blank 4 Alternative 1 is more favorable to the borrower because the borrower receives more cash .
A payday lender lends money on the following terms: “If I give you $100 today, you will write me a check for $120, which you will redeem or I will cash on your next payday.” Noting that calculated rates would be even higher for closer paydays, assume that the payday is two weeks away. (a) What nominal interest rate per year (r) is the lender charging? (b) What effective interest rate per year (ia) is the lender charging? (c) If the lender started with $100 and was able to keep it, as well as all the money received, loaned out at all times, how much money does the lender have at the end of one year?
Mr samuel approached the arnett national bank for a 15,000 loan to purchase vehicle the bank charges interest at the rate of 18 percentage per annum for the duration of the loan the bank also charges the followin fees :BANK FEES 8 percent, stamp duty 0.1 percent,legal fees 7.5 percent, application fee 1 percent a 20 percent deposit of the amount of the loan must also be made if the loan is approved .Calculate: the total amount paid of the fees charged by bank
1. Terry Bergolt's bank granted him a single-payment loan of $4,400 at an interest rate of 6% exact interest. The term of the loan is 72 days. 1a. What is the exact interest? 1b) What is the maturity value of the loan? 2. Jane Dimas obtained a single-payment loan of $420 to pay a repair bill. She agreed to repay the loan in 90 days at an interest rate of 6.25% ordinary interest 2a. What is the ordinary interest? 2b. What is the maturity value of the loan?
Caridad borrowed $17,500 at 11% ordinary interest for 160 days. After 60 days, she made a partial payment of $3,000. What is the final amount due on the loan? (Round to the nearest cent.) $14,820.83 $15,273.69 $15,355.56 $15,545.41 Submit Answer
A customer of your bank comes for a car loan 10000 OMR. He is charged with an interest rate of 5% per year. The customer expects a monthly repayment schedule from you, to plan his repayment. Provide a loan amortization schedule for a monthly repayment of 1 year. (Amortization factor is 0.952 )
Suppose you are a relationship manager at an international bank. A customer who recently got admission at a prestigious Business School approached you for an education loan of Rs. 36,00,000. Your bank offers the education loan at 9.6 percent to be repaid in 10 years in EMIs. You are assigned the task of preparing the amortization schedule for the customer and answer the following. Prepare the amortization schedule for the first 5 EMIs. What will be interest paid for 93th EMI? What will be the loan balance after 93th EMI? What is the total interest paid for the loan?