Loan amortization and capital recoveryIan loaned his friend $30,000 to start a new business. He considers this loan to be an investment, and therefore requires his friend to pay him aninterest rate of 8% on the loan. He also expects his friend to pay back the loan over the next four years by making annual payments at the end ofeach year. Ian texted and asked that you help him calculate the annual payments that he should expect to receive so that he can recover his initialinvestment and earn the agreed-upon 8% on his investment.Calculate the annual payment and complete the following capital recovery schedule:YearBeginning AmountPaymentInterest PaidPrincipal PaidEnding Balance$30,000.0034.$0.02

Given Information: Loan amount = $30,000 Interest Rate = 8% Time Period = 4years

Answered: Loan amortization and capital recovery…

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

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Subject: accounting
III. Assume compound interest is used to solve the following problems. 1. Stanley borrowed $4500.00 from his credit union to do some home renovations. The loan has an annual interest rate of 5.75% and an amortization period of 3 years. a. What is Stanley's monthly payment? b. Calculate the total amount he will pay over 3 years. G Calculate the finance charge on the loan. 2. Adele wants to buy a used car that costs $2900.00. She has $1100.00 saved up for a down payment. a. How much will Adele have to borrow to buy the car? b. She can get a loan at 6.50% per annum with an amortization period of 2 years. What will be her monthly payment? c. What will be the total she pays for the loan? d. How much will the car cost? 3. Calculate the monthly payment, the total amount paid, and the finance charge for the following loans: a $2000.00 at 8.00% per annum for 3 years; b. $10 000.00 at 6.25% per annum for 5 years; and c. $1500.00 at 3.75% per annum for 2 years. 4. Harley used her credit card to…
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