Maris Banking Corporation granted a loan to a borrower on January 1, 2020. The interest rate on the loan is 10% payable annually starting December 31, 2020. The loan matures in five years on December 31, 2025. The data related to the loan are:   Principal amount 6,000,000 Direct origination cost 92,250 Origination fee received from borrower 525,000 Indirect origination cost 100,000   The effective rate on the loan after considering the direct origination cost and origination fee received is 12%. What is the carrying amount of loans receivable on December 31, 2021?

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.