Question

Please do it by type not pics.

1.Calculate the amount of Interest Revenue Recognized at the end of Year 1 - Quarter 2 using the following information:

$80,000 four-year note with 12% interest. The market rate is 11%.  This note's payments are quarterly and interest also compounds quarterly.

Answer 1

Calculation of Interest for 1st Quarter

= ( Amount x Rate of interest ) / 4 quarters

= ( $ 80,000 x 12 % ) / 4 quarters

= $ 9,600 / 4

= $ 2,400

Calculation of Interest for 2ndt Quarter

= [ ( Amount + Interest for 1st Quarter ) x Rate of interest ] / 4 quarters

= [ ( $ 80,000 + $ 2,400 ) x 12 % ] / 4 quarters

= [ $ 82,400 x 12 % ] / 4 quarters

= $ 9,888 / 4

= $ 2,472

Interest revenue recognized at the end of Year 1 - Quarter 2 is

= Interest for 1st Quarter + Interest for 2nd Quarter

= $ 2,400 + 2,472

= $ 4,872