Homework Help is Here – Start Your Trial Now!
Business
Accounting
A loan amortization schedule A chart showing the percentage of the payment applied to the principal and interest

A loan amortization schedule A chart showing the percentage of the payment applied to the principal and interest

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Please answer fast I will rate for you sure.....
Part 2: Mortgage Decision To expand. El Cap Climbing Company (ECCC) is considering taking out a mortgage for a new store location, a nonresidential real property that includes land and a building. Leah is unsure if she has the cash flow to take on any more debt. She asked you to create a loan amortization schedule for the proposed mortgage loan. Then, you'll create a chart that represents the portion of each payment that goes toward principal and interest. A. Prepare the following: A loan amortization schedule A chart showing the percentage of the payment applied to the principal and interest Loan Amortization Schedule First, you'll need to create a loan amortization schedule in the downloaded Excel spreadsheet. Create the table on the tab named "Part 2 Loan Amortization Sched." The following table illustrates the payments and interest amounts. for a fixed-rate, 30-year, $500,000 mortgage, at a five-percent interest rate. The monthly payment will be $2,684.11. Payment Number 0 1 2 Totals 359 360 Payment Amount 2,684.11 2,684.11 2.684.11 2.682.54 5% Interest Expense Principal Balance. 500,000.00 600.78 499,399.22 603.28 498,795.94 2,083.33 2,080.83 ...break in the sequence... 500,000.00 2.661.89 2,671.41 2,671.41 466,278.03 22.22 11.13 Annual Interest Expense 855.56 The table serves as an example of what you'll create in Excel. Note that the table shows only the figures for the first and the last year of payments; you'll need to calculate the amounts for the remaining payments and fill them in. Once you've determined how each amount in the table is obtained, you can use relative and absolute cell references to fill in the full 360 payments. The following is an explanation of the columns in the table: ▪ Payment number-The first column in the table shows the 360 payments required to pay off the mortgage loan (30 years, with 12 monthly payments per year). ▪ Payment amount-The second column shows the monthly payment amount. • Interest-The third column shows the portion of the monthly payment that goes to interest. Principal-The fourth column shows the portion paid toward the principal. Balance-The fifth column shows the starting balance of $500,000, and the remaining balance each month after the principal is subtracted. ▪ Annual interest expense-The last column provides a running total of the interest expense on the mortgage for the entire 12-month period. It's the amount that would be reported on the financial statements. ▪ Totals The "Totals" under the "5% Interest Expense" and "Principal" columns show the final totals for the 30-year life of the mortgage.
Transcribed Image Text:Part 2: Mortgage Decision To expand. El Cap Climbing Company (ECCC) is considering taking out a mortgage for a new store location, a nonresidential real property that includes land and a building. Leah is unsure if she has the cash flow to take on any more debt. She asked you to create a loan amortization schedule for the proposed mortgage loan. Then, you'll create a chart that represents the portion of each payment that goes toward principal and interest. A. Prepare the following: A loan amortization schedule A chart showing the percentage of the payment applied to the principal and interest Loan Amortization Schedule First, you'll need to create a loan amortization schedule in the downloaded Excel spreadsheet. Create the table on the tab named "Part 2 Loan Amortization Sched." The following table illustrates the payments and interest amounts. for a fixed-rate, 30-year, $500,000 mortgage, at a five-percent interest rate. The monthly payment will be $2,684.11. Payment Number 0 1 2 Totals 359 360 Payment Amount 2,684.11 2,684.11 2.684.11 2.682.54 5% Interest Expense Principal Balance. 500,000.00 600.78 499,399.22 603.28 498,795.94 2,083.33 2,080.83 ...break in the sequence... 500,000.00 2.661.89 2,671.41 2,671.41 466,278.03 22.22 11.13 Annual Interest Expense 855.56 The table serves as an example of what you'll create in Excel. Note that the table shows only the figures for the first and the last year of payments; you'll need to calculate the amounts for the remaining payments and fill them in. Once you've determined how each amount in the table is obtained, you can use relative and absolute cell references to fill in the full 360 payments. The following is an explanation of the columns in the table: ▪ Payment number-The first column in the table shows the 360 payments required to pay off the mortgage loan (30 years, with 12 monthly payments per year). ▪ Payment amount-The second column shows the monthly payment amount. • Interest-The third column shows the portion of the monthly payment that goes to interest. Principal-The fourth column shows the portion paid toward the principal. Balance-The fifth column shows the starting balance of $500,000, and the remaining balance each month after the principal is subtracted. ▪ Annual interest expense-The last column provides a running total of the interest expense on the mortgage for the entire 12-month period. It's the amount that would be reported on the financial statements. ▪ Totals The "Totals" under the "5% Interest Expense" and "Principal" columns show the final totals for the 30-year life of the mortgage.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 5 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS