Interest Only Loan Interest only $250,000 loan at 12% APR compounded quarterly with the balance due July 1, 2023. Beg. Bal. Payment New balance Interest Ending Bal. 30-Jun-21 250,000.00 1-Sep-21 1-Jan-22 1-Apr-22 1-Jul-22 1-Sep-22 1-Jan-23 1-Apr-23 1-Jul-23

Interest Only Loan Interest only $250,000 loan at 12% APR compounded quarterly with the balance due July 1, 2023. Beg. Bal. Payment New balance Interest Ending Bal. 30-Jun-21 250,000.00 1-Sep-21 1-Jan-22 1-Apr-22 1-Jul-22 1-Sep-22 1-Jan-23 1-Apr-23 1-Jul-23

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

Interest Only Loan

Interest only $250,000 loan at 12% APR compounded quarterly with the balance due July 1, 2023.

Beg. Bal. Payment New balance Interest Ending Bal.

30-Jun-21 250,000.00

1-Sep-21

1-Jan-22

1-Apr-22

1-Jul-22

1-Sep-22

1-Jan-23

1-Apr-23

1-Jul-23

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TABLE 14.2 Loan amortization table (monthly payment per $1,000 to pay principal and interest on installment loan) Terms in months 6 12 18 24 30 36 42 48 54 60 7.50% $ 170.34 86.76 58.92 45.00 36.66 31.11 27.15 24.18 21.88 20.04 8.00% $ 170.58 86.99 59.15 45.23 36.89 31.34 27.38 24.42 22.12 20.28 8.50% $ 170.83 87.22 59.37 45.46 37.12 31.57 27.62 24.65 22.36 20.52 9.00% $ 171.20 87.46 59.60 45.69 37.35 31.80 27.85 24.77 22.59 20.76 10.00% $ 171.56 87.92 60.06 46.14 37.81 32.27 28.32 25.36 23.07 21.25 10.50% $ 171.81 88.15 60.29 46.38 38.04 32.50 28.55 25.60 23.32 21.49 11.00% $ 172.05 88.38 60.52 46.61 38.28 32.74 28.79 25.85 23.56 21.74 11.50% $ 172.30 88.62 60.75 46.84 38.51 32.98 29.03 26.09 23.81 21.99 12.00% $ 172.55 88.85 60.98 47.07 38.75 33.21 29.28 26.33 24.06 22.24 12.50% $ 172.80 89.08 61.21 47.31 38.98 33.45 29.52 26.58 24.31 22.50 13.00% $ 173.04 89.32 61.45 47.54 39.22 33.69 29.76 26.83 24.56 22.75 13.50% $ 173.29 89.55 61.68 47.78 39.46 33.94 30.01 27.08 24.81 23.01…