A company pledged its entire accounts receivable amounting to P2,500,000 to a financing institution for a loan approved for P2,000,000. The term of the loan requires the company to pay the principal when it becomes mature 4 years from now and also to pay 12% annual interest every end of the year. Should the company has made no collateral for the loan, the interest rate could have been 18%. 

Assuming the transaction occurred on January 1, 20A, compute the total amount of expense that should be deducted from the current year’s income of the company. Round off the final answer to the nearest peso.

Answer rating: 100% (QA)

Amount of Expense for the current yea... View the full answer