David-and-Jack (Pty) Ltd (David-and-Jack) is a men's attire manufacturer and retailer with a focus on men's...

 

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David-and-Jack (Pty) Ltd ("David-and-Jack") is a men's attire manufacturer and retailer with a focus on men's formal and semi-formal wear. The entity's internal designers have recently produced a new shoe range design that has been approved by the directors for manufacturing. After evaluating the cash flow budget for the upcoming periods, however, the financial manager noted that David- and-Jack does not have enough finances available to finance the planned shoe range. The financial manager determined that based on the entity's capital structure, it will be best for the entity to fund the new shoe range with debt. Consequently, negotiations have been entered with Local Bank Ltd. for a R575 000 loan. Local Bank Ltd. has indicated that the bank is willing to provide the loan which will have a 11.8% annually compounding interest rate and 2-year period attached to it. Repayment must occur in equal semi-annual instalments. REQUIRED: Assist David-and-Jack (Pty) Ltd in drafting the loan amortisation schedule. David-and-Jack (Pty) Ltd ("David-and-Jack") is a men's attire manufacturer and retailer with a focus on men's formal and semi-formal wear. The entity's internal designers have recently produced a new shoe range design that has been approved by the directors for manufacturing. After evaluating the cash flow budget for the upcoming periods, however, the financial manager noted that David- and-Jack does not have enough finances available to finance the planned shoe range. The financial manager determined that based on the entity's capital structure, it will be best for the entity to fund the new shoe range with debt. Consequently, negotiations have been entered with Local Bank Ltd. for a R575 000 loan. Local Bank Ltd. has indicated that the bank is willing to provide the loan which will have a 11.8% annually compounding interest rate and 2-year period attached to it. Repayment must occur in equal semi-annual instalments. REQUIRED: Assist David-and-Jack (Pty) Ltd in drafting the loan amortisation schedule.

Answer rating: 100% (QA)

To draft a loan amortization schedule for DavidandJack Pty Ltds R575000 loan from Local Bank Ltd wit... View the full answer