Reference no: EM132971349
On May 1, 2020, the Creditor Bank (CB) granted a loan to Bonus Company (BC), releasing a cash advance before direct origination fee of P5,000,000 discounted at a market rate of 9%. The loan is payable in five equal annual installment of P1,000,000. It is the policy of the company to charge an origination fee equal 70% of the direct origination cost incurred. After considering the direct origination cost and direct origination fee, CB realizes the effective rate of the loan to be 8%.
Problem a: Compute for the following:
1) Direct origination cost and direct origination fee of the loan,
2) Carrying value of the loan on December 31, 2021,
3) Interest income to be reported by CB for 2021,
4) Impairment Loss, if BC could not pay the third installment and immediately negotiated a payment scheme which was approved by CB as follows: Remaining Installment to be paid on a lump-sum basis after 3 years from date of negotiation plus annual interest equal to 5% of remaining installment. 12) Carrying value of the loan on December 31, 2023.
5) Interest of the loan on December 31, 2022.
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