f you borrows $60,000 from the bank at 10% interest over the 7 years of the loan. • What equal annual payments must be made to discharge the loan, plus pay the bank its required rate of interest (round to the nearest dollar)? • How much of his first payment will be applied to Interest? To Principle? • How much of his second payment will be applied to Interest? To Principle?

f you borrows $60,000 from the bank at 10% interest over the 7 years of the loan. • What equal annual payments must be made to discharge the loan, plus pay the bank its required rate of interest (round to the nearest dollar)? • How much of his first payment will be applied to Interest? To Principle? • How much of his second payment will be applied to Interest? To Principle?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 8EB: You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how...

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the situation below. Let's Save Michael is planning to apply for a loan in Quezon Cooperative Bank, he is already aware of the terms payment for his loan but when he is about to pass his application form and compare his computation with the terms of payment provided by the bank he notices some discrepancy. Michael's Computation Computation from the bank Amount of Loan: P100,000 Amount of Loan: P100,000 Interest rate: 3% Interest rate: 3% Due Date: After 3 years Computation: I = (100, 000)(0.03(3) I = P9,000 Amount to be paid after 3 years Year 1 Year 2 Year 3 %3D Int 3000 6090 9272.70 Amt 103,000 106,090 109,272.70 %3D P109,000 To enlighten he asked some explanations why they have different computations and the bank gave him the detailed computation: Initially at t = 0 P100,000 P100,000 (1.03) = P103,000 P103,000 (1.03) = P106,090 P106,090 (1.03) = P109,272.70 at t = 1 at t = 2 %3D at t = 3 %3D Questions 1. Is Michael's computation correct? 2. Is the bank's computation fair? Why? 2 How…
What's New ur Read and analyze the situation below. Let's Save Michael is planning to apply for a loan in Quezon Cooperative Bank, he is already aware of the terms payment for his loan but when he is about to pass his application form and compare his computation with the terms of payment provided by the bank he notices some discrepancy. Michael's Computation Computation from the bank Amount of Loan: P100,000 Interest rate: 3% Amount of Loan: P100,000 Interest rate: 3% Due Date: After 3 years Computation: I = (100, 000)(0.03(3) Year 1 Year 2 Year 3 9272.70 eco Amt 0609 109,272.70 060'901 Int 0008 Amount to be paid after 3 years o C ag 000'6d = I 000'60I To enlighten he asked some explanations why they have different computations and the bank gave him the detailed computation: Initially at t = 0 000'00 P100,000 (1.03) = P103,000 P103,000 (1.03) = P106,090 P106,090 (1.03) = P109,272.70 at t = 1 at t = 2 at t = 3 Questions 1. Is Michael's computation correct? 2. Is the bank's computation…
A friend asks to borrow $51 from you and in return will pay you $54 in one year. If your bank is offering a 6.3% interest rate on deposits and loans: How much would you have in one year if you deposited the $51 instead? How much money could you borrow today if you pay the bank $54 in one year?
II. Solve the following problems. 1. Cris borrows P40,000 and promises to pay the principal and interest at 14% compounded annually. How much must he repay after 8 years? Solution: Given: Unknown: Formula: 2. If you deposit P4000 into an account paying 8% annual interest compounded monthly, how long until there is P9000 in the account? Given: Unknown: Formula: Answer: Given: Unknown: Formula: Solution: Answer: 3. How much money would you need to deposit today at 7% annual interest compounded quarterly to have P16000 in the account after 4 years? Solution: Answer:
If your uncle borrows $70,000 from the bank at 12 percent interest over the ten-year life of the loan. Use Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. What equal annual payments must be made to discharge the loan, plus pay the bank its required rate of interest? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) b. How much of his first payment will be applied to interest? To principal? (Do not round intermediate calculations. Round your final answers to 2 decimal places.)