Question

Suppose you borrow $10,000 from the bank on January 15, 2018 to finance your business. The annual interest rate on the loan is 6%. How much will you record as an interest expense on January 31, 2018?

Answer #1

Amount borrowed on Jan 15,2018 = $10,000

No of days till Jan 31, 2018 = 17 days

Interest Expenses = Loan amount*Annual Interest rate*No of days/365

= $10,000*6%*17/365

**= $27.95**

So, **the amount of interest to be recorded on Jan 31,
2018 is $27.95**

Note - INterest rate is annual so assuming it to be compounding annually.

*If you need any clarification, you can ask in
comments. *

**If you like my answer,
then please up-vote as it will be motivating
**

You borrow $10,000 on January 1 and agree to pay off the loan
with 10 annual end-of-year payments. Your annual effective interest
rate is 5%. Complete the loan amortization table shown below for
payment number 5 and payment number 6.
Payment number Payment Amount
Principal Interest Loan Balance After Payment
5
6

You plan to borrow $30,000 from the bank to pay for inventories
for a gift shop you have just opened. The bank offers to lend you
the money at 10 percent annual interest for the 6 months the funds
will be needed.
a. Calculate the effective rate of interest on the loan.
b. In addition, the bank requires you to maintain a
compensating balance of 15 percent in the bank. Because you are
just opening your business, you do not...

6. Suppose you walk into a bank to borrow money for a new car.
The loan officer tells you that they will loan you $10,000 for the
car at a simple interest rate of 5.3 percent per year. You must
repay the loan at the end of the year.
a) How much interest will you have to
pay?
b) The bank expects that the inflation
rate will be 2.2 percent over the year. What does the bank think
that the...

Suppose you borrow money from your parents for college tuition
on January 1, 2015. Your parents require four annual payments of
$10,000 each, with the first payment due on January 1, 2019. They
are charging you 6% annual interest. What is the cost of the
college tuition? A. $27,447 B. $29,094 C. $15,939 D. $40,000
Table solution Please!

You are about to borrow $10,000 from a bank at an interest rate
of 8%.. You are required to make 15 equal payments of $____ per
year. How much of the 11thpayment (t=11) will go towards
principal repayment?
Question 7 options:
785-805
805-815
815-825
825-835
None of the above

You are considering making a loan at the bank. You will borrow
$10,000 from the bank today. The interest rate on the loan is 5
percent nominal compounded annually. You will completely pay off
the loan with two equal payments. The first payment is due one year
from today, and the second payment is due two years from today.
Your loan payments will be $5378.05 each. How much will your loan
balance be after you make the first payment?
A....

?You plan to borrow ?$50,000 from the bank to pay for
inventories for a gift shop you have just opened. The bank offers
to lend you the money at 11 percent annual interest for the 9
months the funds will be needed? (assume a? 360-day year).
a.??Calculate the annualized rate of interest on the loan.
b.??In? addition, the bank requires you to maintain a 16 percent
compensating balance in the bank. Because you are just opening
your? business, you do...

You plan to borrow $10 comma 000 from the bank to pay for
inventories for a gift shop you have just opened. The bank offers
to lend you the money at 13 percent annual interest for the 3
months the funds will be needed (assume a 360-day year).
a. Calculate the annualized rate of interest on the loan. b. In
addition, the bank requires you to maintain a 20 percent
compensating balance in the bank. Because you are just opening...

Many businesses borrow money during periods of increased
business activity to finance inventory and accounts receivable. For
example, Mattel builds up its inventory to meet the needs of
retailers selling to Christmas shoppers. A large portion of
Mattel's sales are on credit. As a result, Mattel often collects
cash from its sales several months after Christmas. Assume on
November 1, 2018, Mattel borrowed $6 million cash from Metropolitan
Bank and signed a promissory note that matures in six months. The...

Assume that today you borrow $25,000 from your local bank. The
stated interest rate is 10%, compounded annually. It will be a 5
year loan. You will pay back the loan at the end of each of the
next five years. Part A) What will be your annual payment be for
the next five years. Part B) How much of your first payment is
going toward interest? Part C) What is the outstanding principle
balance after you make the first...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 6 minutes ago

asked 11 minutes ago

asked 19 minutes ago

asked 22 minutes ago

asked 38 minutes ago

asked 39 minutes ago

asked 39 minutes ago

asked 39 minutes ago

asked 39 minutes ago

asked 53 minutes ago

asked 59 minutes ago

asked 1 hour ago