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Week 10 Cases Class 1.docx - Week 10 Cases Class 1...

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Week 10 Cases Class 1Discussion Question 10-2On January 1, 2015 Calcium Inc. has the following two alternatives in regard tofinancing:Loan A - $210,000, 4.5% for 5 years. Fixed Principal payments of $21,000 duesemi-annually on June 30 and December 31.Loan B - $210,000, 4.5% for 5 years. Blended Principal Payments of $23,685 duesemi-annually on June 30 and December 31.(a) Instalment schedule for each alternative:
ExpenseJan.1st210,000June 3023,685 (A)4725 (B)18,960 (A-B)191,040Dec. 3123,6854298.4019,386.60171,653June 3023,685Dec. 3123,685Option B – pay less cashDR Interest Expense4298.40DR Loan Payable19,386.60CR Cash23,68510-3:500,000 * 6% * 6/12 months = 15,000 (Interest Paid)521,880 * 5% * 6/12 months = 13,047 (Interest Recorded)521,880 – 500,000 = 21,880PeriodInterest tobe Paid6%Interest

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Term
Fall
Professor
allan.F
Tags
1966, 1971, 1979, 1944, 1973

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