For the next 5 questions, refer to the following information: On January 1, 2021, ABC Company borrows P2,000,000 from a bank. The annual loan amortization is P487,781, to be paid at the end of each of the next 5 years. The lender charges 7% on the balance at the beginning of each year.

For the next 5 questions, refer to the following information: On January 1, 2021, ABC Company borrows P2,000,000 from a bank. The annual loan amortization is P487,781, to be paid at the end of each of the next 5 years. The lender charges 7% on the balance at the beginning of each year.

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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Question

pls refer to the attached image

1. What is the principal balance of the loan as of January 1, 2022?

2. What is the principal balance of the loan as of December 31, 2024, after payment was made?

3. How much total amount of interest that will be paid for the next 5 years?

4. Suppose that ABC company can only afford to pay P400,000 every end of each year, what is the maximum amount of loan that company can avail? (Note: loan term and interest rate remain the same)

For the next 5 questions, refer to the following information:
On January 1, 2021, ABC Company borrows P2,000,000 from a bank. The annual loan amortization is P487,781, to be paid at the end
of each of the next 5 years. The lender charges 7% on the balance at the beginning of each year.

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