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3 years ago

What is the price paid for the use of borrowed money referred to as?

1 answer:

3 0

Interest
Interest is the monetary charge for borrowing money—generally expressed as a percentage, such as an annual percentage rate (APR). Key factors affecting interest rates include inflation rate, length of time the money is borrowed, liquidity, and risk of default. Interest can also express ownership in a company.

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Exercise 5-15B Record notes receivable and interest revenue (LO5-7) On March 1, Company A provides legal services to Company B r

Alex787 [66]

Answer:

March 1: Note acceptance

Debit Note receivable $9,100

Credit Accounts receivable $9,100

(To record note receivable from Company B)

Sept 1: Cash collection

Debit Cash $9,100

Credit Note receivable $9,100

(To record cash collection of note receivable)

Debit Cash $364

Credit Interest receivable $364

(To record cash collection of interest receivable on note)

Explanation:

Note is a promissory note with a written promise made by the borrower to the lender (payee) to pay a certain, definite sum at a specified date.

Interest revenue on the note is calculated as: Principal x Interest Rate x Time

The total interest revenue is $9,100 x 8%/12 x 6 months = $364.

Monthly interest revenue is therefore $364 / 6 months = $60.67.

The 6 months is from March 1 to Sept. 1.

On a monthly basis, Company A would accrue for the interest revenue as follows:

Debit Interest receivable $60.67

Credit Interest revenue $60.67

(Interest accrual on notes receivable)

6 0

3 years ago

GenX has a target capital structure of 40 percent common stock, 5 percent preferred stock, and 55 percent debt. Its cost of equi

AVprozaik [17]

Answer:

12.085 %

Explanation:

WACC = Cost of Equity x Weight of Equity + Cost of Preference Stock x Weight of Preference Stock + Cost of Debt x Weight of Debt

Remember to use the after tax cost of debt :

after tax cost of debt = interest x ( 1 - tax rate)

= 8.00 % x (1 - 0.35)

= 5.20 %

therefore,

WACC = 22.00 % x 0.40 + 8.50 % x 0.05 + 5.20 % x 0.55

= 12.085 %

thus

the firm's WACC given a tax rate of 35 percent is 12.085 %

6 0

3 years ago

Becca has $500 to open a checking account. She wants an account with the lowest fees. She writes about 12 checks per month and h

Vinvika [58]

Answer:

Low balance checking account

Explanation:

Since Becca has a small amount of money, only $500, and only uses the ATM around 4 times per month, her best option is a low balance checking account. This type of checking account works very well for people that can only keep a small balance. Many banks don't charge fees for this type of account as long as you write only a limited number of checks, your bank statement is sent to you online, and you use only their ATMs.

The other types of checking accounts usually require much higher balances, and of the minimum balance is not met, then they will charge you a monthly fee.

7 0

4 years ago

Read 2 more answers

Who sets guidelines for the exemption as it applies to earnings?

Sever21 [200]

The annual exempt amount applies to the earnings of each non-grace taxable year prior to the year of full retirement age, as defined

6 0

3 years ago

Grouper Excavating Inc. is purchasing a bulldozer. The equipment has a price of $95,300. The manufacturer has offered a payment

ICE Princess25 [194]

Answer:

A total interest $37,246.54

B It will pay $18,304.50 dollar per year

It is better to use the boan borrowing as the installment per year is lower.

Explanation:

A installment times time less principal = total interest

18,935.22 x 7 - 95,300 = 37,246.54

B calcualte the installment of the bank offer:

$PV \div \frac{1-(1+r)^{-time} }{rate} = C\\$

PV 95,300.00

time 7

rate 0.08

$95300 \div \frac{1-(1+0.08)^{-7} }{0.08} = C\\$

C $ 18,304.500

As it is lower than manufactures quota it should be accepted

6 0

3 years ago