What is the net effect of the loan on welcomes profit, Managerial Accounting

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What is the net effect of the loan on welcomes profit

Problem

On Jan. 1, 20x1, Welcome Bank extended a 4-year, P500,000, zero-interest loan to a client. The borrower received loan proceeds of P500,000 and that amount is due in lump sum at maturity. The prevailing interest rate for this type of loan is 12%. What is the net effect of the loan on Welcome's profit in 20x1?

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Managerial Accounting: What is the net effect of the loan on welcomes profit

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Managerial Accounting: What is the net effect of the loan on welcomes profit

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