On December 31, 2021, Macedon Bank has a 5-year loan receivable with a face value of P5,000,000 dated January 1, 2020 that is due on December 31, 2024. Interest on the loan is payable at 9% every December 31.The borrower paid the interest that was due on December 31, 2020 but informed the bank that interest accrue in 2021 will be paid at maturity date. There is a high probability that the remaining interest payments will not be paid because of financial difficulty. The prevailing market rate of interest on December 31, 2021 is 10%. The PV of 1 for three periods is .772 at 9% and .751 at 10%. What is the loan impairment loss to be recognized on December 31, 2021? a. 1,242,600 O b. 1,590,000

On December 31, 2021, Macedon Bank has a 5-year loan receivable with a face value of P5,000,000 dated January 1, 2020 that is due on December 31, 2024. Interest on the loan is payable at 9% every December 31.The borrower paid the interest that was due on December 31, 2020 but informed the bank that interest accrue in 2021 will be paid at maturity date. There is a high probability that the remaining interest payments will not be paid because of financial difficulty. The prevailing market rate of interest on December 31, 2021 is 10%. The PV of 1 for three periods is .772 at 9% and .751 at 10%. What is the loan impairment loss to be recognized on December 31, 2021? a. 1,242,600 O b. 1,590,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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