A bank makes a 5-year $75,000 loan with no principal payments in years 1-2 and principal payments of $25,000 in Years 3, 4 and 5. The interest rate is 8% and will be paid every year. What interest and principal is paid in year 4 $6,000 + $25,000 $6,000+$50,000 $4,000+$25,000 $4,000+$50,000
A bank makes a 5-year $75,000 loan with no principal payments in years 1-2 and principal payments of $25,000 in Years 3, 4 and 5. The interest rate is 8% and will be paid every year. What interest and principal is paid in year 4 $6,000 + $25,000 $6,000+$50,000 $4,000+$25,000 $4,000+$50,000
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 4MC: A ski company takes out a $400,000 loan from a bank. The bank requires eight equal repayments of the...
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QUESTION 1
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A bank makes a 5-year $75,000 loan with no principal payments in years 1-2 and principal payments of $25,000 in Years 3, 4 and 5. The interest rate is 8% and will be paid every year. What interest and principal is paid in year 4
$6,000 + $25,000
$6,000+$50,000
$4,000+$25,000
$4,000+$50,000
Expert Solution
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Step 1
Principal payment
The amount you initially promised to repay, or the principal, is what you owe. The fee for borrowing a principal is known as interest. Any payment made on a car loan will typically be allocated first to any fees that are due (for example, late fees).
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