In order to finance a new product line, a company that makes high-temperature ball bearings borrowed $1.7 million at 8% per year compound Interest. The company repaid the loan in a lump sum amount after 3 years. Note: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. What was the amount and percentage of interest based on the original principal? Enter your answer in thousands of dollars and not millions. The interest was $ The percentage of interest was

In order to finance a new product line, a company that makes high-temperature ball bearings borrowed $1.7 million at 8% per year compound Interest. The company repaid the loan in a lump sum amount after 3 years. Note: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. What was the amount and percentage of interest based on the original principal? Enter your answer in thousands of dollars and not millions. The interest was $ The percentage of interest was

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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McMasters Inc. specializes in BBQ accessories. In order for the company to expand its business, they take out a long-term loan in the amount of $800,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 9%. Each year on December 31, the company pays down the principal balance by $50,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.
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Emerson Processing borrowed $900,000 for in- stalling energy-efficient lighting and safety equipment in its La Grange manufacturing facility. The terms of the loan were such that the company could pay interest only at the end of each year for up to 5 years, after which the company would have to pay the entire amount due. If the interest rate on the loan was 12% per year and the company paid only the interest for 4 years, determine the following: (a) The amount of each of the four interest payments (b) The amount of the final payment at the end of year 5
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