Answer:
The answer is 0.91%
Explanation:
Solution
Farmers Bank:
Lending Amount =$50,000
Nominal rate (APR) =5.0%
Interest paid = Quarterly (4 periods in a year)
Thus
The effective annual rate (EAR) = (1 +APR/Number of compounding periods a year)^(number of compounding periods a year) -1
=(1 +5.0%/4)^4 -1
=(1+ 0.0125)^4 -1
=(1.0125)^4 -1
=1.05094533691406 -1
= 0.5094533691406
= 5.0954%
Therefore the effective annual rate in farmer bank is 5.0954%
Merchants Bank:
Lending Amount =$50,000
Nominal rate (APR) =6.0%
Interest paid = Annually (1 period in a year)
Thus
The effective annual rate (EAR) = (1 +APR/Number of compounding periods a year)^(number of compounding periods a year) -1
=(1+ 6.0%/1)^1 -1
= (1+0.06)^1 -1
=(1.06)^1 -1
=1.06-1
=0.06 or 6.0000%
Therefore the effective annual rate of the Merchant bank is 6.000%
Now,
The difference between the annual rates=EAR merchant bank -EAR Farmers bank
=6.0000% - 5.0945%
=0.9055% or 0.91%
Therefore the difference between the effective annual rates charged by the two banks is 0.91%
Answer:
Explanation:
(a). The journal entry for issuance of note is shown below:
Accounts payable A/c Dr $10,000
To Notes Payable $10,000
(Being notes payable is issued)
(b). The journal entry for payment of the note at the time of maturity is shown below:
Notes Payable A/c Dr $10,000
Interest expense A/c Dr $200*
To Cash $10,200
(Being payment of note with interest is recorded)
* The computation of interest expense is shown below
= Issued amount × rate of interest × number of days ÷ total number of days
= $10,000 × 6% × 120/360
= $200
Answer:
Please see the answer below:
Explanation:
Debit: Depreciation Expense $2,750
Credit: Accumulated Depreciation $2,750
To record adjusting entry for Depreciation Expense of Equipment.
- For T-accounts the entries will made as above, <em>Depreciation T-Account</em> will be Debited with $2750 and <em>Accumulated Depreciation T-Account</em> will be credited with $2750.
Balance Sheet as of December 31
<em>Fixed Assets:</em> $ $
Equipment 22,000
Less: Accumulated Depreciation (2,750)
Net Cost of Equipment as of Dec 31 19,250
B. Products featured in a producer’s ad campaign.
Answer:
$908.33
Explanation:
The computation is shown below:
Given that
Average house price in the united states = $27,358
Before 6 years, the average price is $21,908
So, the annual increase in the price is
= (Average house price in the united states - Before 6 years, the average price ) ÷ time period
= ($27,358 - $21,908) ÷ 6 years
= $908.33