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Is a method that banks normally use on loans

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Max Powers, Vice President for National Lending, has instructed the computer programmer to use a 365-day year to calculate interest expense on the company's liabilities, which are loans they have taken out. He has also instructed the programmer to use a 360-day year to calculate interest revenue on assets, which are the loans they have given out to clients.

Respond to the following questions

Question 1: What are the financial ramifications of using a 365-day year opposed to a 360-day year on both the interest expense and interest revenue?

Question 2: Which method should be used? Can both methods be used?

Question 3: Mention whether Max is behaving in a professional manner.

Question 4: Is there a method that banks normally use on loans?

Reference no: EM132784914

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