Moderate Bank granted a loan to a borrower on January 1, 2020. The interest on the loan is 10% payable annually starting December 31, 2020. The loan matures in three years on December 31, 2022. Principal amount 5,000,000 Direct origination cost incurred 100,000 Indirect origination cost incurred 50,000 Origination fee received from the borrower 340,000 After considering the origination fee received from the borrower and the direct origination cost incurred, the effective rate on the loan is 12%. 1. What is the carrying amount of the loan receivable on January 1, 2020? a. 4,760,000 b. 5,000,000 c. 4,810,000 d. 4,660,000 2. What is the interest income for 2020? a. 571,200 b. 500,000 c. 476,000 d. 547,200 3. What is the carrying amount of the loan receivable on December 31, 2020? a. 5,000,000 b. 4,760,000 c. 4,831,200 d. 4,910,944
Moderate Bank granted a loan to a borrower on January 1, 2020. The interest on the loan is 10% payable annually starting December 31, 2020. The loan matures in three years on December 31, 2022.
Principal amount 5,000,000
Direct origination cost incurred 100,000
Indirect origination cost incurred 50,000
Origination fee received from the borrower 340,000
After considering the origination fee received from the borrower and the direct origination cost incurred, the effective rate on the loan is 12%.
1. What is the carrying amount of the loan receivable on January 1, 2020?
a. 4,760,000
b. 5,000,000
c. 4,810,000
d. 4,660,000
2. What is the interest income for 2020?
a. 571,200
b. 500,000
c. 476,000
d. 547,200
3. What is the carrying amount of the loan receivable on December 31, 2020?
a. 5,000,000
b. 4,760,000
c. 4,831,200
d. 4,910,944
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