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You borrow $1,000 from me today and promise to repay a lump sum of $1,000 to me at the end of 3 years AND pay interest on this balance at a 10% rate at the end of each of the next 3 years.

Prepare the j/e made today for the loan
Prepare the journal entry made at the end of 3 years for the repayment of the loan
Prepare the journal entry that would be made at the end of each of the next 3 years for the interest payment.
What is the yearly effective interest rate of return I earned by lending you this money?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9945332

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