Will the effective rate of interest be the same on a $10,000 face value, 6 percent interest-bearing note and a $10,000 face value, 6 percent discount note? Is the amount of cash received upon making these two loans the same? Why or why not?
Answer to relevant QuestionsAssume that on October 1, 2016, Big Company borrowed $10,000 from the local bank at 6 percent interest. The note is due on October 1, 2017. How much interest does Big pay in 2016? How much interest does Big pay in 2017? What ...The following transactions apply to Park Co. for 2016: 1. Received $50,000 cash from the issue of common stock. 2. Purchased inventory on account for $180,000. 3. Sold inventory for $250,000 cash that had cost $140,000. ...Vail Book Mart sells books and other supplies to students in a state where the sales tax rate is 8 percent. Vail Book Mart engaged in the following transactions for 2016. Sales tax of 8 percent is collected on all sales. 1. ...The following transactions apply to Walnut Enterprises for 2016, its first year of operations: 1. Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was ...Culver Co. employed Jen Sing in 2016. Jen earned $5,200 per month and worked the entire year. Assume the Social Security tax rate is 6 percent on the first $110,000 of earnings and the Medicare tax rate is 1.5 percent. ...
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