On January 1, 2020, Oceanic Bank made a P1,000,00ó 8% loan. The P80,000 interest is receivable at the end of each year, with the principal amount to be received at the end of five years. At the end of 2020, the first year's interest of P80,000 has not ye been received because the borrower is experiencing financial difficulties. The borrower negotiate a restructuring of the loan. The payment of all the interest for 5 years will be delayed until the end of the 5-year loan term. In addition, the amount of principal repayment will be dropped from P1,000,000 to P500,000. The PV of 1 at 8% for 4 periods is .735. No interest revenue has been recognized in 2020 in connection with the loan. What amount should be reported as interest income for 2021? * a.80,000 b.52,920 c.48,960 d.0

On January 1, 2020, Oceanic Bank made a P1,000,00ó 8% loan. The P80,000 interest is receivable at the end of each year, with the principal amount to be received at the end of five years. At the end of 2020, the first year's interest of P80,000 has not ye been received because the borrower is experiencing financial difficulties. The borrower negotiate a restructuring of the loan. The payment of all the interest for 5 years will be delayed until the end of the 5-year loan term. In addition, the amount of principal repayment will be dropped from P1,000,000 to P500,000. The PV of 1 at 8% for 4 periods is .735. No interest revenue has been recognized in 2020 in connection with the loan. What amount should be reported as interest income for 2021? * a.80,000 b.52,920 c.48,960 d.0

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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On December 31, 2019, GMC had a document payable with a value in the $ 100,000 books. GMC has faced economic difficulties that have not allowed to meet the payment of this debt. Suppose that on the date mentioned the The bank agreed to change the terms of the loan as follows: the principal (maturity value) was reduced to $ 80,000, the expiration date was changed to 31 December 2022, and the contractual interest rate was reduced from 15% to 10%. Determine the effect of this restructuring of debt on the Net Income of GMC on 12/31/19. to. GMC is going to report a profit of $ 20,000. b. GMC will report a profit equal to 5% of the principal. c. GMC is going to report a profit of $ 4,000. d. When the terms of the contract are adjusted, the debtor does NOT report earnings.
Suicune Bank granted a P5,000,000 loan to Raikou Company on January 1, 2020. The annual interest on the loan is 8% payable semi-annually. The loan matures in three years on December 31, 2022. The effective interest rate on the loan is 6%. How much is the carrying amount of the loan as of December 31, 2020?
A floating rate mortgage loan is made for $185,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $1,480. Required: a. What will be the loan balance at the end of year 1? b. If the interest rate increases to 13 percent at the end of year 2, how much is the payment plus negative amortization in year 2 and year 5 if the payment remains at $1,480?
A person borrowed a loan and pledged to repay it and its interest using the amortization method, out of the loan principal with interest in four installments. Each installment is paid at the end of every six months. If you know that the interest rate is 5% annually and that the first installment of the principal amount and its interest is 840 dinars, so the value of the loan amount is??A - 3200 dinarsB - 3600 dinarsc 4000 dinarsD - 4500 dinars.
On December 31, 2014, JKL Bank granted P6,000,000 loan to a borrower with a 10% stated rate payable SEMI-ANNUALLY and maturing in 4 years. The loan was discounted at an interest rate of 12%. Unfortunately, the financial condition of the borrower worsened because of lower revenue. On December 31, 2016, the bank determined that the borrower would pay back only P1,000,000 of the principal at maturity. However, it was considered likely that interest would continue to be paid on the P6,000,000 loan. (Round off PV factor to 4 decimal places) 1. Cash paid to the borrower on December 31, 2014 2. Carrying amount of the loan at December 31, 2016 3. Interest income for the year 2016 4. Impairment loss to be recognized on December 31, 2016 5. Carrying amount of the loan at December 31, 2017
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SureWin Company owes an amount of debt to a bank and the bank proposed the following annual payments to pay off the debt. Year 0 (Today): 20,000 Year 1: 24,000; Year 2: 30,000; Year 3: 30,000; Year 4: 35,000; (1) If the appropriate interest rate that bank is charging is APR 6% annual compounding, what would be the amount to debt owed today? (2) If SureWin can negotiate with the bank to pay yearly equal instalments over 4 years starting from the end of year 1 with the same 6% annual interest rate, what would be the amount of yearly payment? (3) If the bank accepts SureWin proposal in (2), what would be the interest amount paid to the bank in the first year?
Cheyenne Corp. borrowed $1080000 from National Bank on May 31, 2019. The 3-year, 7% note required annual payments of $411536 beginning May 31, 2020. The total amount of interest to be paid over the life of the loan is O $75600. O $154608. O $301688. O $226800.
Groudon Bank loaned P12,000,000 to Kyogre Company on January 1, 2020, the terms of the loan require principal payments of P2,000,000 each year for 6 years plus interest at 6%. The first principal and interest payment is due on December 31, 2020. Kyogre made the required payments on December 31, 2020, and December 31, 2021. However, Kyogre began to experience financial difficulties during 2022 which requires the bank to reassess the collectibility of the loan. On December 31, 2022, the bank determined that the remaining principal payments will be collected but the collection of the interest is unlikely. The bank did not accrue the interest for 2022. Expected Principal Payments December 31, 2024 P4,000,000 December 31, 2025 2,500,000 December 31, 2026 1,500,000 Note: Round off present value factors up to four decimal points; round off the final value up to two decimal points. E.g., 0.7812 and 123,518.25 Questions: How much is the impairment loss to be recorded on December…
For items 15 to 17 BDO Bank loaned P7,500,000 to a borrower on January 1, 2023. The terms of the loan were payment in full on December 31, 2027 plus annual interest payment at 12% beginning December 31, 2023. The interest payment was made as scheduled on December 31, 2023. However, due to financial setbacks, the borrower was unable to make the December 31, 2024 interest payment. The bank considered the loan impaired and projected the cash flows from the loan on December 31, 2024. The bank had accrued the interest on December 31, 2024. Date of cash flow December 31, 2025 December 31, 2026 December 31, 2027 December 31, 2028 Amount projected December 31, 2023 Present value of 1 at 12% P500,000 One period .89 1,000,000 Two periods .80 2,000,000 Three periods.71 4,000,000 Four periods .64 What amount should be recognized as impairment loss for 2024?
On January 1, 2021, Banco de Oro made a 1,000,000 8% loan with interest receivable at the end of each year in the amount of 80,000 and the principal amount to be received at the end of five years. At the end of 2021, the borrower is experiencing financial difficulties so the interest for the first year in the amount of 80,000 has not yet been received. The borrower negotiated a restructuring of the loan. The payment of all of the interest for 5 years will be delayed until the end of the 5-year loan term. In addition, the amount of principal repayment will be dropped from P1,000,000 to P500,000. The PV of 1 at 8% for 4 periods is 0.735. No interest revenue has been recognized in 2021 in connection with the loan. What amount should be reported as interest income for 2022?
On January 1, 2020, ABC Co. borrowed P5,000,000 from a bank at a variable rate of interest for 4 years. Interest will be paid annually to the bank on December 31, and the principal is due on December 31, 2023. Under the agreement, the market rate of interest on each January 1 resets the variable rate for that period and the amount of interest to be paid on December 31. To protect itself from fluctuations in interest rate, the entity hedged the variable interest by entering into a four-year “receive variable, pay fixed” interest rate swap with a speculator. The interest rate swap s based on the notional amount of P5,000,000 and an 8% fixed interest rate. This agreement means that the entity will receive a swap payment from the speculator if the market rate on January 1 is more than 8% and will make a swap payment to the speculator if the market rate on January 1 is lower than 8%. The swap payments are made at the end of each year. The entity has designated this interest rate swap as…

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