EthicsLesson-Unit3 - earning the bank extra money, and...

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Professor and Class, Neka Kiser, vice president of operations for Mountain National Bank, has instructed the banks computer programmer to use a 365 day year to compute the interest on depository accounts (payable). Neka also instructed the programmer to use a 360 day year to compute interest on loans (receivables). Is Neka behaving in a professional manner? First of all, Neka should not instruct his programmer to use a 360 day year unless there is no computer or calculator to use in figuring the amounts. When there is no computer or calculator available, the 360 day year is easier to figure. However, most banks use computers to compute interest amounts and therefore use a 365 day year. Second of all, by Neka instructing the programmer to use a 360 day year to figure interest on loans, he is
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Unformatted text preview: earning the bank extra money, and basically ripping off customers. For example, Ms. Amy gave us the following problem to figure. The interest rate is 12% on $2000.00 for 120 days. This based on a 360 day year would earn the bank $80.00. The interest rate is 12% on $2000.00 for 120 days. This based on a 365 day year would earn the bank $78.90. By using the 360 day year, the bank has made an extra $1.10 per $2000.00 loaned. This also allows the bank to pay $1.10 less in interest per $2000.00 that gets deposited into the bank. To me, this is considered shady accounting practices. Yes, any company, especially banks wants to save money, but they should not do it at the expense of its customers. Wendy Eller...
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