Question 7. PINAUTANG started constructing a building for its own use in March 1, 2020. PINAUTANG provided the following information related to the construction: Outstanding loans of the Company at January 1, 2020: Interest Rate 5% 10% Total March 1, 2020 May 31, 2020 July 1, 2020 November 31,2020 December 31, 2020 Amount of loan P10,000,000 20,000,000 P30,000,000 C. 21,944,217 D. 22,152,467 On January 1, 2020, PINAUTANG also borrowed P3,000,000 at 15% per annum, to specifically fund its expected construction on March 1, 2020. P1,000,000 8,000,000 7,000,000 Interest Cost 4,000,000 1,000,000 P 500,000 2,000,000 P2,500,000 February 1, 2021 March 31, 2021 P3,000,00 2,000,000 How much is the total cost of the constructed asset as of December 31, 2020? Group of answer choices A. 23,950,000 B. 22,133,060

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.