28 National Co. borrowed P100,000 for six months from the bank. The rate is prime plus 1percent. The prime rate was 8.5 percent at the beginning of the loan and changed to 9 percentafter two months. This was the only change. How much interest must National Co. corporationрay? *Format: 1,111

In this question we have to calculate interest on national co. for the 6 months

Answered: National Co. borrowed P100,000 for six…

National Co. borrowed P100,000 for six months from the percent. The prime rate was 8.5 percent at the beginning after two months. This was the only change. How much pay? *

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.

Question

National Co. borrowed P100,000 for six months from the bank. The rate is prime plus 1
percent. The prime rate was 8.5 percent at the beginning of the loan and changed to 9 percent
after two months. This was the only change. How much interest must National Co. corporation
рay? *
Format: 1,111

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