On November 1, 2021, FDN Trading accepted a 90-day, 8% P8,000,000 note from ABC Co. FDN immediately discounted with recourse the note to a bank that offers a 12% discount rate. FDN assumes the interest expense associated with this transaction. How much interest expense should FDN Trading debit on its records? Calculate the total interest expense and NOT the net interest expense.
On November 1, 2021, FDN Trading accepted a 90-day, 8% P8,000,000 note from ABC Co. FDN immediately discounted with recourse the note to a bank that offers a 12% discount rate. FDN assumes the interest expense associated with this transaction. How much interest expense should FDN Trading debit on its records? Calculate the total interest expense and NOT the net interest expense.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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On November 1, 2021, FDN Trading accepted a 90-day, 8% P8,000,000 note from ABC Co. FDN immediately discounted with recourse the note to a bank that offers a 12% discount rate. FDN assumes the interest expense associated with this transaction. How much interest expense should FDN Trading debit on its records? Calculate the total interest expense and NOT the net interest expense.
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