Question Tag: Loan Repayment

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  • 20 Marks

MRB – OCT 2022 – L4 – Q1 – Crop Yield Failure and Loan Repayment Strategies

Advise on strategic steps for farmers to ensure loan repayment amid crop yield failures due to climate change.

Crop yield failure is a common phenomenon in small scale farming more also in the era of increasing effect of climate change.

What strategic steps will you advise farmers take to ensure the repayment of their loans?

(20 Marks)

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  • 20 Marks

CBLP – APRIL 2023 – L4 – Q1 – Implications of Barclays Bank Ruling on Banker-Customer Relationship

Describe the implications of the ruling in Barclays Bank Ltd. Vs. Sakari on the banker-customer relationship.

In the decided case of Barclays Bank Ltd. Vs. Sakari [ [1996-97] GLR 639 SC the court held that ‘the duty of the bank is to advance money and that of the customer is to repay the loan with interest, if any’ .

Describe the implications of this ruling on the banker customer relationship.

(30 Marks)

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  • 1 Marks

BMF – Nov 2020 – L1 – SA – Q7 – Basics of Business Finance and Financial Markets

Calculate the simple interest rate for a 3-month loan.

Ronny wants to borrow N160,000 from his friend. He is willing to pay back N174,400 in 3 months. What simple interest rate will be applicable?
A. 34%
B. 35.5%
C. 36%
D. 36.5%
E. 37%

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  • 20 Marks

QTB – Nov 2014 – L1 – SB – Q6 – Mathematics of Business Finance

Calculate the value of an investment with compound interest, the payoff amount for a loan with simple interest, and the additional interest for a loan with monthly payments and reduced interest rates.

a. If N250,000 is invested in an account that earns 4% per year compound interest, what is the:
i. value of the investment after 5 years? (3 Marks)
ii. total interest earned? (2 Marks)

b. When it was apparent that your parents could not afford to finance your university education, you sought and obtained a 4-year loan of N250,000.00 from Education Bank Limited. The bank imposed a simple interest rate of 7½%.
i. How much do you need to pay off the bank now

(4 years after) that you are through with your study?

(7 Marks)
ii. If you decide to be paying N25,000 every month from now and the bank agreed to reduce the interest rate to 1% per month on the unpaid balance at the beginning of the month, how much additional total interest will be paid? (8 Marks)

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  • 1 Marks

QTB – Nov 2015 – L1 – SA – Q19 – Mathematics of Business Finance

This question asks which type of loan incurs a higher effective rate if paid off ahead of time.

The borrower who pays off a …………………… ahead of time pays a higher effective rate:

A. Discounted loan
B. Standing loan
C. Amortised loan
D. Ordinary loan
E. Bank loan

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Has Case Study
  • 10 Marks

SCS – Nov 2020 – L3 – Q7 – International financial management

Explain how to handle ethical conflicts and assess the impact of transaction risk on GGOH’s ability to repay its loan.

ABGL that the loan will be paid within the period specified.

Required:
i) In reference to the IFAC suggested model for dealing with ethical conflicts and using your judgement, explain how you will undertake this assignment with integrity. (5 marks)

ii) Assess the impact of transaction risk on the ability of GGOH to repay its loan, with relevant calculations. (5 marks)

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  • 1 Marks

BMF – May 2021 – L1 – SA – Q14 – Basics of Business Finance and Financial Markets

Calculates the simple interest on a loan of N150,000 at 6% p.a. for 18 months.

Brown borrowed N150,000 at 6% p/a simple interest for 18 months, what is the value of interest due at the end of the period?
A. N13,200
B. N13,500
C. N13,800
D. N14,000
E. N14,200

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  • 20 Marks

MI – May 2024 – L1 – SB – Q2 – Budgeting

Prepare a cash budget based on sales collections, purchases, and other financial data for the third quarter.

Breakable Limited is preparing for the last half of the year and you, as the cost accountant, have been requested to prepare the cash budget for the third quarter of the year. The following information were available:

  1. Sales – 20% of monthly sales are in cash, while the balance is on credit.
    a. Collections from receivables are as follows:
    i. 60% in the first month after sales.
    ii. 20% in the second month; and
    iii. The balance after considering 1% bad debt and 5% discount on the outstanding balance in the third month after sales.
  2. Purchases are usually 60% of the month’s Sales and are paid for 70% in the same month and 30% in the following month less 2% discount on the total purchase price.
  3. Loan of N500,000 is expected to be approved by the bank on the first day of August, payable equally over twelve months with one month moratorium and 1% interest on the outstanding.
  4. Salary deductions are paid on the preceding month’s basis.
  5. The sum of N951,550 being a fixed deposit will mature in the month of July; N500,000 will be reinvested the same month with 0.5% interest credited the following month.
  6. Cash and cash equivalent balance as at end of June is N1,050,706.
  7. Bank Charges are 1% of total outflow from the bank payment for the month.
  8. Additional information:
Month Sales Net Salaries Expenses Salary Deductions
April 850,000 430,000 210,700 39,400
May 900,000 500,000 221,500 48,400
June 1,250,000 650,000 297,500 49,480
July 1,520,000 720,000 277,200 58,700
August 1,650,000 740,000 287,500 52,750
September 1,800,000 770,000 292,700 57,650
October 1,400,000 770,000 292,700 57,650

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  • 5 Marks

QT – Nov 2016 – L1 – Q4c – Mathematics of Business Finance

Calculate the semi-annual sinking fund deposit required to repay a loan after 5 years.

Maame TorTor borrows GH¢3,000.00 and agrees to pay interest quarterly at an annual rate of 8%. At the same time, she sets up a sinking fund in order to repay the loan at the end of 5 years. The sinking fund earns interest at the rate of 6% compounded semi-annually.

Required:
Determine the size of each semi-annual sinking fund deposit. (5 marks)

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  • 5 Marks

QT – Nov 2016 – L1 – Q4a – Mathematics of Business Finance

Explain the terms annuities, sinking fund, and amortization related to loan repayment.

One of the most important applications of annuities is the repayment of interest-bearing debts. These debts can be paid by making periodic deposits into a sinking fund, which is used at a future date to pay the principal of the debt, or by making periodic payments that cover the outstanding interest and the principal. This second method is called amortization.

Required:
i) Explain the term annuities as used in the statement above. (2 marks)
ii) What is a sinking fund? (2 marks)
iii) When is a loan with a fixed rate of interest said to be amortized? (1 mark)

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  • 20 Marks

MRB – OCT 2022 – L4 – Q1 – Crop Yield Failure and Loan Repayment Strategies

Advise on strategic steps for farmers to ensure loan repayment amid crop yield failures due to climate change.

Crop yield failure is a common phenomenon in small scale farming more also in the era of increasing effect of climate change.

What strategic steps will you advise farmers take to ensure the repayment of their loans?

(20 Marks)

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  • 20 Marks

CBLP – APRIL 2023 – L4 – Q1 – Implications of Barclays Bank Ruling on Banker-Customer Relationship

Describe the implications of the ruling in Barclays Bank Ltd. Vs. Sakari on the banker-customer relationship.

In the decided case of Barclays Bank Ltd. Vs. Sakari [ [1996-97] GLR 639 SC the court held that ‘the duty of the bank is to advance money and that of the customer is to repay the loan with interest, if any’ .

Describe the implications of this ruling on the banker customer relationship.

(30 Marks)

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  • 1 Marks

BMF – Nov 2020 – L1 – SA – Q7 – Basics of Business Finance and Financial Markets

Calculate the simple interest rate for a 3-month loan.

Ronny wants to borrow N160,000 from his friend. He is willing to pay back N174,400 in 3 months. What simple interest rate will be applicable?
A. 34%
B. 35.5%
C. 36%
D. 36.5%
E. 37%

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  • 20 Marks

QTB – Nov 2014 – L1 – SB – Q6 – Mathematics of Business Finance

Calculate the value of an investment with compound interest, the payoff amount for a loan with simple interest, and the additional interest for a loan with monthly payments and reduced interest rates.

a. If N250,000 is invested in an account that earns 4% per year compound interest, what is the:
i. value of the investment after 5 years? (3 Marks)
ii. total interest earned? (2 Marks)

b. When it was apparent that your parents could not afford to finance your university education, you sought and obtained a 4-year loan of N250,000.00 from Education Bank Limited. The bank imposed a simple interest rate of 7½%.
i. How much do you need to pay off the bank now

(4 years after) that you are through with your study?

(7 Marks)
ii. If you decide to be paying N25,000 every month from now and the bank agreed to reduce the interest rate to 1% per month on the unpaid balance at the beginning of the month, how much additional total interest will be paid? (8 Marks)

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  • 1 Marks

QTB – Nov 2015 – L1 – SA – Q19 – Mathematics of Business Finance

This question asks which type of loan incurs a higher effective rate if paid off ahead of time.

The borrower who pays off a …………………… ahead of time pays a higher effective rate:

A. Discounted loan
B. Standing loan
C. Amortised loan
D. Ordinary loan
E. Bank loan

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Has Case Study
  • 10 Marks

SCS – Nov 2020 – L3 – Q7 – International financial management

Explain how to handle ethical conflicts and assess the impact of transaction risk on GGOH’s ability to repay its loan.

ABGL that the loan will be paid within the period specified.

Required:
i) In reference to the IFAC suggested model for dealing with ethical conflicts and using your judgement, explain how you will undertake this assignment with integrity. (5 marks)

ii) Assess the impact of transaction risk on the ability of GGOH to repay its loan, with relevant calculations. (5 marks)

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  • 1 Marks

BMF – May 2021 – L1 – SA – Q14 – Basics of Business Finance and Financial Markets

Calculates the simple interest on a loan of N150,000 at 6% p.a. for 18 months.

Brown borrowed N150,000 at 6% p/a simple interest for 18 months, what is the value of interest due at the end of the period?
A. N13,200
B. N13,500
C. N13,800
D. N14,000
E. N14,200

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  • 20 Marks

MI – May 2024 – L1 – SB – Q2 – Budgeting

Prepare a cash budget based on sales collections, purchases, and other financial data for the third quarter.

Breakable Limited is preparing for the last half of the year and you, as the cost accountant, have been requested to prepare the cash budget for the third quarter of the year. The following information were available:

  1. Sales – 20% of monthly sales are in cash, while the balance is on credit.
    a. Collections from receivables are as follows:
    i. 60% in the first month after sales.
    ii. 20% in the second month; and
    iii. The balance after considering 1% bad debt and 5% discount on the outstanding balance in the third month after sales.
  2. Purchases are usually 60% of the month’s Sales and are paid for 70% in the same month and 30% in the following month less 2% discount on the total purchase price.
  3. Loan of N500,000 is expected to be approved by the bank on the first day of August, payable equally over twelve months with one month moratorium and 1% interest on the outstanding.
  4. Salary deductions are paid on the preceding month’s basis.
  5. The sum of N951,550 being a fixed deposit will mature in the month of July; N500,000 will be reinvested the same month with 0.5% interest credited the following month.
  6. Cash and cash equivalent balance as at end of June is N1,050,706.
  7. Bank Charges are 1% of total outflow from the bank payment for the month.
  8. Additional information:
Month Sales Net Salaries Expenses Salary Deductions
April 850,000 430,000 210,700 39,400
May 900,000 500,000 221,500 48,400
June 1,250,000 650,000 297,500 49,480
July 1,520,000 720,000 277,200 58,700
August 1,650,000 740,000 287,500 52,750
September 1,800,000 770,000 292,700 57,650
October 1,400,000 770,000 292,700 57,650

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  • 5 Marks

QT – Nov 2016 – L1 – Q4c – Mathematics of Business Finance

Calculate the semi-annual sinking fund deposit required to repay a loan after 5 years.

Maame TorTor borrows GH¢3,000.00 and agrees to pay interest quarterly at an annual rate of 8%. At the same time, she sets up a sinking fund in order to repay the loan at the end of 5 years. The sinking fund earns interest at the rate of 6% compounded semi-annually.

Required:
Determine the size of each semi-annual sinking fund deposit. (5 marks)

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  • 5 Marks

QT – Nov 2016 – L1 – Q4a – Mathematics of Business Finance

Explain the terms annuities, sinking fund, and amortization related to loan repayment.

One of the most important applications of annuities is the repayment of interest-bearing debts. These debts can be paid by making periodic deposits into a sinking fund, which is used at a future date to pay the principal of the debt, or by making periodic payments that cover the outstanding interest and the principal. This second method is called amortization.

Required:
i) Explain the term annuities as used in the statement above. (2 marks)
ii) What is a sinking fund? (2 marks)
iii) When is a loan with a fixed rate of interest said to be amortized? (1 mark)

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