Given the annual interest rate and a line of an amortization schedule for that loan, complete the next line of the schedule. Assume that payments are made monthly. Annual Interest Paid on Interest Rate Payment Paid Principal Balance 6.9% $527.76 $49.01 $478.75 $8,045.24 Fill out the amortization schedule below. Annual Paid on Payment Balance Interest Rate Principal 6.9% $527.76 $478.75 $8,045.24 $ $ Interest Paid $49.01 $
Given the annual interest rate and a line of an amortization schedule for that loan, complete the next line of the schedule. Assume that payments are made monthly. Annual Interest Paid on Interest Rate Payment Paid Principal Balance 6.9% $527.76 $49.01 $478.75 $8,045.24 Fill out the amortization schedule below. Annual Paid on Payment Balance Interest Rate Principal 6.9% $527.76 $478.75 $8,045.24 $ $ Interest Paid $49.01 $
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Use chart and round to nearest cent
![### Understanding Amortization Schedules
#### Given Data
To understand how to complete an amortization schedule, let’s use the provided information as an example. Assume that payments are made monthly.
#### Amortization Schedule
Here is a line of an amortization schedule for a loan with an annual interest rate of 6.9%:
| Annual Interest Rate | Payment | Interest Paid | Paid on Principal | Balance |
|----------------------|-----------|---------------|-------------------|------------|
| 6.9% | $527.76 | $49.01 | $478.75 | $8,045.24 |
#### Task
You need to complete the next line of the amortization schedule.
Here is the partially filled schedule that you need to complete:
| Annual Interest Rate | Payment | Interest Paid | Paid on Principal | Balance |
|----------------------|-----------|---------------|-------------------|------------|
| 6.9% | $527.76 | $49.01 | $478.75 | $8,045.24 |
| ______ | $527.76 | ______ | ______ | ______ |
#### Explanation
1. **Interest Calculation:**
- Interest for the next period is calculated based on the remaining balance.
- The monthly interest rate is derived from the annual interest rate. For a 6.9% annual rate, the monthly interest rate is:
\[
\text{Monthly Interest Rate} = \frac{6.9\%}{12} = 0.575\%
\]
- Interest Paid in the next period:
\[
\text{Interest Paid} = \text{Balance} \times \text{Monthly Interest Rate} = 8,045.24 \times 0.00575 = \$46.26
\]
2. **Principal Payment Calculation:**
- Paid on Principal is the difference between the total payment and the interest paid:
\[
\text{Paid on Principal} = \text{Payment} - \text{Interest Paid} = 527.76 - 46.26 = \$481.50
\]
3. **New Balance Calculation:**
- New Balance is the remaining balance after subtracting the principal payment:
\[
\text{New Balance} = \text{Balance} - \](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe34d490e-1bcd-4b3c-8858-e89cb8d5c9df%2F8b6c0e2c-20f2-45ca-9fef-f11912f9921a%2Fiuiguw_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Understanding Amortization Schedules
#### Given Data
To understand how to complete an amortization schedule, let’s use the provided information as an example. Assume that payments are made monthly.
#### Amortization Schedule
Here is a line of an amortization schedule for a loan with an annual interest rate of 6.9%:
| Annual Interest Rate | Payment | Interest Paid | Paid on Principal | Balance |
|----------------------|-----------|---------------|-------------------|------------|
| 6.9% | $527.76 | $49.01 | $478.75 | $8,045.24 |
#### Task
You need to complete the next line of the amortization schedule.
Here is the partially filled schedule that you need to complete:
| Annual Interest Rate | Payment | Interest Paid | Paid on Principal | Balance |
|----------------------|-----------|---------------|-------------------|------------|
| 6.9% | $527.76 | $49.01 | $478.75 | $8,045.24 |
| ______ | $527.76 | ______ | ______ | ______ |
#### Explanation
1. **Interest Calculation:**
- Interest for the next period is calculated based on the remaining balance.
- The monthly interest rate is derived from the annual interest rate. For a 6.9% annual rate, the monthly interest rate is:
\[
\text{Monthly Interest Rate} = \frac{6.9\%}{12} = 0.575\%
\]
- Interest Paid in the next period:
\[
\text{Interest Paid} = \text{Balance} \times \text{Monthly Interest Rate} = 8,045.24 \times 0.00575 = \$46.26
\]
2. **Principal Payment Calculation:**
- Paid on Principal is the difference between the total payment and the interest paid:
\[
\text{Paid on Principal} = \text{Payment} - \text{Interest Paid} = 527.76 - 46.26 = \$481.50
\]
3. **New Balance Calculation:**
- New Balance is the remaining balance after subtracting the principal payment:
\[
\text{New Balance} = \text{Balance} - \
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education