To start your business, you take a loan of $20,000 at 6.25 % compounded semi-annually. You want to settle the loan by making (end of) annual payments for five years. Answer the questions below about the scenario and provided (partial) amortization schedule for the loan. Show calculations for the second row and final payment only. A. Find the values for the following: a) CY = b) PY = c) I/Y = B. The loan payment is $4,792.92. Which formula was used to find this amount? Circle the correct answer. a) PVord b) FVord C. Interest for the first payment: Looking at the amortization schedule below, write out the formula and calculations used to find the interest, principal, and balance amounts for the first payment (row 2). Provide all steps and ensure your answer matches that in
To start your business, you take a loan of $20,000 at 6.25 % compounded semi-annually. You want to settle the loan by making (end of) annual payments for five years. Answer the questions below about the scenario and provided (partial) amortization schedule for the loan. Show calculations for the second row and final payment only. A. Find the values for the following: a) CY = b) PY = c) I/Y = B. The loan payment is $4,792.92. Which formula was used to find this amount? Circle the correct answer. a) PVord b) FVord C. Interest for the first payment: Looking at the amortization schedule below, write out the formula and calculations used to find the interest, principal, and balance amounts for the first payment (row 2). Provide all steps and ensure your answer matches that in
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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Q1 C
Transcribed Image Text:Question 1: Amortization Schedule
Untitled - Not..
To start your business, you take a loan of $20,000 at 6.25% compounded semi-annually. You
want to settle the loan by making (end of) annual payments for five years. Answer the
questions below about the scenario and provided (partial) amortization schedule for the loan.
Show calculations for the second row and final payment only.
A. Find the values for the following:
a) CY =
b) PY =
c) I/Y =
B. The loan payment is $4,792.92. Which formula was used to find this amount? Circle the
correct answer.
a) PVord
b) FVord
C. Interest for the first payment: Looking at the amortization schedule below, write out
the formula and calculations used to find the interest, principal, and balance amounts
for the first payment (row 2). Provide all steps and ensure your answer matches that in
the table.
Payment #
Payment (PNT)
Principal (PRN)
Interest (Int)
Balance (BAL)
20, 000
1
1,045.88
808.03
12,729.57
8,744.68
4,792.92
4,792.92
4,792.92
4,792.92
3,747.04
3,984.89
4506.84
ZERO
4
4,237.84
555.08
286.08
4506.84
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