Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Chapter 7, Problem 17SEB
To determine
Identify the first interest payment amount of Company M.
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Flat Rock Inc recently borrowed $55,000 from its bank at a simple interest rate of 9.2%. The loan is for one year and the loan agreement calls for the interest to be added to the amount borrowed and the total amount ot be repaid in monthly installments. (a) what are the loans monthly payments? (b) compute th loans APR and rEAR.
Find the interest rates earned on each of the following:a. You borrow $720 and promise to pay back $792 at the end of 1 year.b. You lend $720 and the borrower promises to pay you $792 at the end of 1 year.c. You borrow $65,000 and promise to pay back $98,319 at the end of 14 years.d. You borrow $15,000 and promise to make payments of $4,058.60 at the end of each year for 5 years.
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You entered into a mortgage agreement to borrow $100,000 at an interest rate of 3% and to be returned in 30 years. You pay a constant amount at the end of each year, partly to cover the interest and the rest to pay back the principal.a) How much are you paying to the bank each year?b) At the end of 23 years, how much principal do you still owe the bank?
Chapter 7 Solutions
Financial Accounting
Ch. 7 - Prob. 1YTCh. 7 - Prob. 2YTCh. 7 - Prob. 3YTCh. 7 - If a 1,000 bond is selling for 95.5, how much cash...Ch. 7 - Prob. 5YTCh. 7 - Prob. 6YTCh. 7 - Prob. 7YTCh. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - What is a mortgage?
Ch. 7 - Prob. 4QCh. 7 - Prob. 5QCh. 7 - Prob. 6QCh. 7 - Prob. 7QCh. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - Prob. 10QCh. 7 - Prob. 11QCh. 7 - Prob. 12QCh. 7 - Prob. 13QCh. 7 - Prob. 1MCQCh. 7 - All of the following are current liabilities...Ch. 7 - Prob. 3MCQCh. 7 - Prob. 4MCQCh. 7 - Prob. 5MCQCh. 7 - Prob. 6MCQCh. 7 - Prob. 7MCQCh. 7 - Prob. 8MCQCh. 7 - A 1,000 bond with a stated rate of 8% is issued...Ch. 7 - Prob. 10MCQCh. 7 - Prob. 1SEACh. 7 - Prob. 2SEACh. 7 - Prob. 3SEACh. 7 - Prob. 4SEACh. 7 - Account for mortgages. (LO 3). Nunez Company has...Ch. 7 - Prob. 6SEACh. 7 - Account for bonds. (LO 4). If a 1,000 bound is...Ch. 7 - Prob. 8SEACh. 7 - Prob. 9SEACh. 7 - Prob. 10SEACh. 7 - Prob. 11SEACh. 7 - Prob. 12SEBCh. 7 - Prob. 13SEBCh. 7 - Prob. 14SEBCh. 7 - Prob. 15SEBCh. 7 - Account for mortgages. (LO 3). Curtain Company...Ch. 7 - Prob. 17SEBCh. 7 - Prob. 18SEBCh. 7 - Prob. 19SEBCh. 7 - Prob. 20SEBCh. 7 - Prob. 21SEBCh. 7 - Prob. 22SEBCh. 7 - Prob. 23EACh. 7 - Prob. 24EACh. 7 - Prob. 25EACh. 7 - Prob. 26EACh. 7 - Account for long-term liabilities. (LO 3, 5)....Ch. 7 - Prob. 28EACh. 7 - Prob. 29EACh. 7 - Prob. 30EACh. 7 - Prob. 31EACh. 7 - Prob. 32EACh. 7 - Prob. 33EACh. 7 - Prob. 34EACh. 7 - Prob. 35EACh. 7 - Prob. 36EACh. 7 - Prob. 37EACh. 7 - Prob. 38EACh. 7 - Prob. 39EACh. 7 - Prob. 40EACh. 7 - Prob. 41EACh. 7 - Prob. 42EBCh. 7 - Prob. 43EBCh. 7 - Prob. 44EBCh. 7 - Prob. 45EBCh. 7 - Prob. 46EBCh. 7 - Prob. 47EBCh. 7 - Prob. 48EBCh. 7 - Account for long-term liabilities. (LO 3, 5). On...Ch. 7 - Prob. 50EBCh. 7 - Prob. 51EBCh. 7 - Prob. 52EBCh. 7 - Prob. 53EBCh. 7 - Prob. 54EBCh. 7 - Prob. 55EBCh. 7 - Prob. 56EBCh. 7 - Prob. 57EBCh. 7 - Prob. 58EBCh. 7 - Prepare an amortization schedule for a bond issued...Ch. 7 - Prob. 60EBCh. 7 - Account for current liabilities. (LO 1, 5). On...Ch. 7 - Prob. 62PACh. 7 - Prob. 63PACh. 7 - Prob. 64PACh. 7 - Prob. 65PACh. 7 - Prob. 66PACh. 7 - Prob. 67PBCh. 7 - Prob. 68PBCh. 7 - Prob. 69PBCh. 7 - Prob. 70PBCh. 7 - Prob. 71PBCh. 7 - Prob. 72PBCh. 7 - Prob. 1FSACh. 7 - Prob. 2FSACh. 7 - Prob. 3FSACh. 7 - Prob. 1IECh. 7 - Prob. 2IECh. 7 - Do owners or creditors have more claims on the...Ch. 7 - Prob. 4IE
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- 4) You borrow $2500 on September 3rd this year. Your demand loan carries an interest rate of 7.46%. You make partial payments of $500 on October 15th and $1575 on November 17th, You want to make a final payment of the remaining outstanding balance on November 30tn. What is the size of your final payment? Use the declining balance method. A) $450.02 B) $399.76 C) $612.84 D) $851.11 E) $449arrow_forwardPlease show how to solve a. b. and c. using the information below and Excel. Interest-only mortgage with monthly payments and loan amount: $56,000; Term: 15 years; Annual interest rate: 7.5% a. What is the total payment in the 180th month? b. What is the outstanding balance at the end of 10 years (120 months)? c. What is the total interest payment during the entire loan term (180 months)?arrow_forwardA payday lender lends money on the following terms: “If I give you $100 today, you will write me a check for $120, which you will redeem or I will cash on your next payday.” Noting that calculated rates would be even higher for closer paydays, assume that the payday is two weeks away. (a) What nominal interest rate per year (r) is the lender charging? (b) What effective interest rate per year (ia) is the lender charging? (c) If the lender started with $100 and was able to keep it, as well as all the money received, loaned out at all times, how much money does the lender have at the end of one year?arrow_forward
- 4. On 1/1/21 we sell equipment and accept a 3-year note receivable for $36,500. The market value is $36,500. Payments of $13,655 include both principal and interest and are to be made annually starting on 1/1/22. The present value of the payments is $36,500. The bank would require the purchaser to pay interest of 6% in order to borrow from them. The equipment cost us $90,000 and had a book value of $40,000. Note: Be sure to show the date of each journal entry. The 'right' journal entry on the 'wrong' date is wrong. a. Prepare an amortization table b. Prepare the journal entry for 1/1/21 c. Prepare the journal entry for 12/31/21 d. Prepare the journal entry for 1/1/22 Amortization table: Journal entries: Debits Credits 1/1/21 12/31/21 1/1/22arrow_forward1. Consider a home mortgage of $150,000 at a fixed APR of 4.5% for 25 years. a. Calculate the monthly payment. b. Determine the total amount paid over the term of the loan. c. Of the total amount paid, what percentage is paid toward the principal and what percentage is paid for interest. 2. Someone needs to borrow $11,000 to buy a car and the person has determined that monthly payments of $225 are affordable. The bank offers a 3-year loan at 7% APR, a 4-year loan at 7.5%, or a 5-year loan at 8% APR. Which loan best meets the person's needs? Explain. Question content area bottom Part 1 Which loan best meets the person's needs? (Round to the nearest cent as needed.) A. The first loan best meets the person's needs because the monthly payment of $enter your response here is less than the maximum budgeted amount of $225 per month. B. The second loan best meets the person's needs because the monthly payment of $enter your response here…arrow_forwardSheridan Service has a line of credit loan with the bank. The initial loan balance was $6000.00. Payments of $2000.00 and $2500.00 were made after five months and eight months respectively. At the end of one year, Sheridan Service borrowed an additional $4000.00. Nine months later, the line of credit loan was converted into a collateral mortgage loan. What was the amount of the mortgage loan if the line of credit interest was 5% compounded monthly? The amount of the loan is $arrow_forward
- The First Common Bank has advertised one of its loan offerings asfollows: “We will lend you $125,000 for up to 3 years at an APR of 7.5% (interestcompounded monthly).” If you borrow $125,000 for one year, how much interestwill you have paid and what is the banks APY?arrow_forwardYou take out a 10-year installment loan for $220,000 and will make 40 quarterly payments of $9.672.19. Given this information, determine the ratio of the interest that you will pay over the first 4 years (Payments 1-16) to the interest that you will pay over the last 6 years (Payments 17-40). O 1.399 O 1.417 O 1.364 O 1.381 1.436arrow_forward(Related to Checkpoint 6.3) (Determining the outstanding balance of a loan) Ten years ago you took out a $300,000, 25-year mortgage with an annual interest rate of 11 percent and monthly payments of $2,940.34. What is the outstanding balance on your current loan if you just make the 120th payment? If you just make the 120th payment, the outstanding balance on your current loan is $. (Round to the nearest cent.)arrow_forward
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7.2 Ch 7: Notes Payable and Interest, Revenue recognition explained; Author: Accounting Prof - making it easy, The finance storyteller;https://www.youtube.com/watch?v=wMC3wCdPnRg;License: Standard YouTube License, CC-BY