Hello tutor please given General accounting question answer do fast and properly explain all answer Greenfield Corporation plans to borrow $800,000 from the Oakwood Bank bysigning a 5%, 10-year note on April 1. The note calls for 120 monthly payments of$7,000, which includes both interest and principal components. If the budgeteddebt service cost for April is $7,000, what is the amount applied to the principal ofthe note?

Step 1: Define Amount Applied to PrincipalThe amount applied to principal refers to the portion of a…

Answered: Greenfield Corporation plans to borrow…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 16P

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How much is applied to the principal of the note?
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Weathers Catering Supply, Inc., needs to borrow $149,000 for 6 months. State Bank has offered to lend the funds at an annual rate of 9.2% subject to a 10.5% compensating balance. (Note: Weathers currently maintains $0 on deposit in State Bank.) Frost Finance Co. has offered to lend the funds at an annual rate of 9.2% with discount-loan terms. The principal of both loans would be payable at maturity as a single sum. a. Calculate the effective annual rate of interest on each loan. b. What could Weathers do that would reduce the effective annual rate on the State Bank loan?
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Boyd Company has a line of credit with State Bank. Boyd can borrow up to $520,000 at any time over the course of the Year 1 calendar year. The following table shows the prime rate expressed as an annual percentage along with the amounts borrowed and repaid during Year 1. Boyd agreed to pay interest at an annual rate equal to 1 percent above the bank’s prime rate. Funds are borrowed or repaid on the first day of each month. Interest is payable in cash on the last day of the month. The interest rate is applied to the outstanding monthly balance. For example, Boyd pays 6 percent (5 percent + 1 percent) annual interest on $72,000 for the month of January. Month Amount Borrowed or (Repaid) Prime Rate for the Month January $ 72,000 5% February 52,000 5 March (46,000) 6 April through October No change No change November (36,000) 6 December (22,000) 5 Boyd earned $37,000 of cash revenue during Year 1.Required Prepare an income statement, balance sheetand statement of cash…

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