Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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With the success of your business, you are ready to establish a storefront. However, you do not have the necessary funds to acquire the building and pay the necessary rent. You are considering borrowing a short-term note from a bank for $130,000.
Required part B.
- Research the lending practices of a local bank.
- Determine the interest rate charged for a $130,000 loan.
- What collateral does the bank require to secure the loan?
- Determine your overall payback amount if you were to repay the loan in less than one year. Choose either a payback with periodic payments or all at the end of the loan term and compare the outcomes.
- After conducting your research, would you consider borrowing the money?
- What positive and negative outcomes accompany borrowing the money?
- Instead of borrowing on a short-term note, you are thinking on borrowing $130,000 and signed a 5-year, note payable with a 12% interest rate. Each annual payment is in the amount of $34,920 and payment is due each Dec. 31. What is the
journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)
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