Concept explainers
Loan payments and interest Schuyler Company wishes to purchase as asset costing $117.000.The full amount needed to finance the asset can be borrowed at 14% interest. The terms of the loan required equal end of the payments for the next 6 years. Determine the total annual loan payment, and break it into amount of interest and the amount of the principal paid for the each year. (Hint: Use the techniques presented in Chapter 5 to find the loan payment.)
Want to see the full answer?
Check out a sample textbook solutionChapter 17 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Additional Business Textbook Solutions
MARKETING:REAL PEOPLE,REAL CHOICES
Intermediate Accounting (2nd Edition)
Foundations Of Finance
Auditing And Assurance Services
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Engineering Economy (17th Edition)
- Using the information provided, what transaction represents the best application of the present value of an annuity due of $1? A. Falcon Products leases an office building for 8 years with annual lease payments of $100,000 to be made at the beginning of each year. B. Compass, Inc., signs a note of $32,000, which requires the company to pay back the principal plus interest in four years. C. Bahwat Company plans to deposit a lump sum of $100.000 for the construction of a solar farm In 4 years. D. NYC Industries leases a car for 4 yearly annual lease payments of $12,000, where payments are made at the end of each year.arrow_forwardFind the payment necessary to amortize a 5.5% loan of $7700 compounded semiannually, with 6 semiannual payments. Find (a) the payment necessary to amortize the loan and (b) the total payments and the total amount of interest paid based on the calculated semiannual payments. Then create an amortization table to find (C) the total payments and total amount of interest paid based upon the amortization table. a. The semiannual payment needed to amortize this loan is $ (Round to the nearest cent as needed.) b. The total amount of the payments is $ (Round to the nearest cent as needed.) The total amount of interest paid is $ (Round to the nearest cent as needed.) c. The total payment for this loan from the amortization table is $ %24 The total interest from the amortization table is $arrow_forwardGive typing answer with explanation and conclusion A 10-year loan of L is prepaid by the amortization method with payments of $1,000 at the end of each year. The annual effective interest rate is i. The total amount of interest repaid during the life of the loan is also equal to L. Calculate the amount of interest paid during the first year. (show formula and step by step solution)arrow_forward
- Suppose a borrower makes a $100,000 loan with annual payments at a 10 percent rate and a 10-year term. The loan is fully amortizing; however, payments are made on an annual basis to simplify the initial illustration. How the annual loan payment is calculated?arrow_forwardFind the payment necessary to amortize a 7% loan of $2200 compounded quarterly, with 6 quarterly payments. Find (a) the payment necessary to amortize the loan and (b) the total payments and the total amount of interest paid based on the calculated quarterly payments. Then create an amortization table to find (c) the total payments and total amount of interest paid based upon the amortization table. a. The quarterly payment needed to amortize this loan is $ b. The total amount of the payments is $ The total amount of interest paid is $ c. The total payment for this loan from the amortization table is $ The total interest from the amortization table is $ Keep getting it wrong when I reach point b... need help thxarrow_forwardA fully amortizing mortgage loan is made for $99,000 at 6 percent interest for 25 years. Payments are to be made monthly. Required: a. Calculate monthly payments. b. Calculate interest and principal payments during month 1. c. Calculate total principal and total interest paid over 25 years. d. Calculate the outstanding loan balance if the loan is repaid at the end of year 10. e. Calculate total monthly interest and principal payments through year 10. f. What would the breakdown of interest and principal be during month 50? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F What would the breakdown of interest and principal be during month 50? (Do not round intermediate calculations. Round final answers to 2 decimal places.) Interest payment Principal paymentarrow_forward
- Solve the following problems using the concept of amortization 1. Show the amortization schedule for a loan P15,000 at 4% interest compounded monthly, payable for 12 months. 2. ABC Realty sold a piece of land for P250,000. A down payment of P50,000 was made and the remainder is to be paid in equal semiannual installments, the first due 6 months after the date of sale. The interest is 8% compounded semiannually and the debt is to be amortized in 5 years. a. How much semiannual payment is required? b. What will the total amount of the payment be? How much interest will be paid? d. What is the total cost of the property? С. e. Prepare an amortization schedule for the present value of the loan after making the down payment.arrow_forwardA fully amortizing mortgage loan is made for $84,000 at 6 percent interest for 25 years. Payments are to be made monthly. Required: a. Calculate monthly payments. b. Calculate interest and principal payments during month 1. c. Calculate total principal and total interest paid over 25 years. d. Calculate the outstanding loan balance if the loan is repaid at the end of year 10. e. Calculate total monthly interest and principal payments through year 10. f. What would the breakdown of interest and principal be during month 50?arrow_forwardComplete the following from the first three lines of an amortization schedule for the following loan:You borrow $ 225000 with an annual interest rate of 9% over 20 years New balance after month 1 payment = New balance after month 2 payment = New balance after month 3 payment =arrow_forward
- You have obtained a loan from the bank for $50,000 at 11.0% compounded quarterly. You will have the loan paid off in 15 years. Your quarterly payment will be $1,900.00. 1. a) Label the amortization schedule (in words not symbols b) Construct a partial amortization schedule showing the details of the first paymentarrow_forwardFinancearrow_forwardA 3,300,000 loan was granted to a borrower by Norayma Bank with a nominal interest rate of 12% which is paid every year end. The loan matures in 4 years on December 31, 2023. After considering the direct origination cost and origination fees, the market rate on the loan is 8%. 1,124,000 was earned as interest income for the whole term of the loan. If the origination fee was 100,000, determine the initial carrying cost of the loan. The answer is: 3,760,000 but I need the solution. Thanksarrow_forward
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College