Answered: what percentage of the outstanding…

Business

Finance

what percentage of the outstanding principal does the company pay in interest each month?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 5Q: If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the...

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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

A construction company takes a loan of

$1,322,000

to cover the cost of a new grader. If the interest rate is

7.95%

APR, and payments are made monthly for five years, what percentage of the outstanding principal does the company pay in interest each month?

0.76%

6.63%

0.61%

0.71%

0.66%

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