Kevin's Watch

I am having one heck of a time with my graduate accounting class. I have to project a loan repayment and for some reason my receipts are more than my payments. Yet, there should be payments.

Is there anyone on the Watch who is an accountant who could help me with this because I am quite frazzled?

Well Creator could help you but he's, ah, Festing...

Just my luck...

Well, tell him that he needs to get on the watch and help me!!! eheh.

I'm a commercial banker. Spell out the problem and I'll take a crack at it.

you da man, brinn.
financial forecasting: my disbursments are percentages of the receipts. do I take the percentages from the receipt total or the sales forecast total?

Hey Jove,

My background is finance and not accounting but I do use a great deal of accounting in my day-to-day duties. With that said, I still can't figure out the question you're asking. Can you give me a numerical example?

It sounds like you're trying to create a projection but are you projecting a profit and loss statement? A statement of cash flows? Give me some more details and if I can't answer you I have several colleagues who are CPA's and I'm sure they can help.

Thank you so much Brinn. One of my classmates finally answered my plea for help and he found my mistake. Low and behold, everything worked out.

It was a cash flow statement and I had to calculate a loan and pre-payment plan for the bank. I was just coming up with the wrong numbers because I was calculating my expenses against the actual cash receipts rather than the forecasted sales.

HOWEVER - since you are a finance guy, I have another question for you: I need to find the components of discounted loans. I know that interest loan components are interest rate, inflation, risk premium and credit risk but I cannot find any for discount loans.

Any suggestions?

YAY for Brinn ... while I am not 'festing anymore ... I'd be waaaayyy out of my depth here. Im the IT guy (CIO) in a banking world! You do need the real bankers!

Jove wrote:Thank you so much Brinn. One of my classmates finally answered my plea for help and he found my mistake. Low and behold, everything worked out.

It was a cash flow statement and I had to calculate a loan and pre-payment plan for the bank. I was just coming up with the wrong numbers because I was calculating my expenses against the actual cash receipts rather than the forecasted sales.

HOWEVER - since you are a finance guy, I have another question for you: I need to find the components of discounted loans. I know that interest loan components are interest rate, inflation, risk premium and credit risk but I cannot find any for discount loans.

Any suggestions?

MBA-student DW here, with the tiniest bit of assistance. If by discounted loan you mean a secondary market loan, i.e., a loan that you assume or purchase from someone else, I believe that the same factors apply as a primary interest loan would. To calculate, you of course need to know the remaining term of the loan, the payment, and the principle of the loan along with the interest rate.

Hope this helps.

dw

Hello, fellow MBA student! I am glad that I am not the only one going through this. We will have to exchange notes. eheh.

No, by discounted loans I mean short term loans in which the interest and/or charges are deducted from the face amount of the loan at the time it is made.

Hey Jove,

Once again your terminology has me completely confused. That's no reflection on you but more likely a difference between the jargon used in academia and that which I've been exposed to.

When you ask for the components of a loan what are you looking for the componenets of? Are you engaged in a NPV exercise? Are you looking to calculate a payment? Are you examining the factors that go into the rate? In your question you state that "...interest loan components are interest rate, inflation, risk premium and credit risk." I'm looking at these "components" and trying to see what they have in common so that I might extrapolate that to a discount loan and I'm at a loss once again. At first blush I would say that these components appear to be some of the factors one would need to calculate a NPV on loan repayment but I would also expect to see factors such as term and face amount included as well. Sorry Jove. I guess I'm not as helpful as I thought I might be but if you care to elaborate I'll look at it again tomorrow!

Brinn, I am finding the problem is not you nor I but my instructor who does not speak English very well. He was asking for components and when a few students questioned him on it, he was talking about interest and discount rates for present and future value computations.

Go figure.

Wonderful tenure system!! GRRRR

My daughter has the same problem at NCSU - her first semester calculus teacher was english and accent challenged ... so was the teachers student aid!

My daughter and many other students didn't pass because of his poor communication skills. And the universities do nothing!

[At Freshman orientation, one parent asked the Dean about what options were available with students with english 'challenged' teachers. This Dean 'danced' around it and mentioned testing that each teacher must pass on English skills. Hmmmm .... I wonder how much that testing is VERBAL!!

Aha! Based on that description, you are talking about someting like buying Treasury bills. So, for example, if you are set to purchase a 12-month T-bill today (face value of $10,000) at the going market rate of 7%, you would expect to pay $9345.79 today for it, and you would receive $10K at the end of the 12-month period.

dw

....it's thread like this that make me GLAD I'm getting my librarian's degree.

Balon wrote:....it's thread like this that make me GLAD I'm getting my librarian's degree.

Yeah, I can agree with that. I'm really interested in economics and try to expose myself to as much as possble. I've read books on keynesian economics and macro economics and I've read some Henry George and The Wealth Of Nations. I've also read some more politically-charged books that deal with macro economics, like David Friedman's stuff.

But it's the thought of learning it all off by heart on a daily basis and being tested on it that I know I couldn't handle. And then there's the mathematics to think about!

You people certainly earn my respect.