A loan with a current value of 34,500 has a payment plan that starts with a...

A loan with a current value of 34,500 has a payment plan that starts with a high end of year payment that goes down by the same amount each year until the loan is paid off. Using an interest rate of 8.0% and the first year payment of 8200, calculated by how much the end of year payment will go down to pay off the loan after just 7 years. Note use the sign to show if the payment goes up or down as the plan may not

Solutions

Expert Solution

Year	Opening Loan Balance	Interest rate	Interest amount (opening loan * Interest rate)	Installment (interest+Principal repayment)	Fixed Principal Repayment every year	Closing Balance (opening loan - principal repayment)
1	34500	8%	2760	8200	5440	29060
2	29060	8%	2324.8	(-)7764.8	5440	23620
3	23620	8%	1889.6	(-)7329.6	5440	18180
4	18180	8%	1454.4	(-)6894.4	5440	12740
5	12740	8%	1019.2	(-)6459.2	5440	7300
6	7300	8%	584	(-)6024	5440	1860
7	1860	8%	148.8	(-)2008.8	1860	0

In year 1 Interest amount is 34500 * 8% = 2760,Since first installment is 8200 the principal repayment is the balance i.e 8200 - 2760 = 5440 which remains the same every year until year 7 when balance principal is paid off.The installment amount is calculated by adding the principal and interest amount (for ex year 2 installment = 2324.8+5440=7764.8).The payment goes down every year.

(-) indicates payment goes down

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Annuity Plan A has an initial annual payment that starts at $10,000 and grows at 5%...

Annuity Plan A has an initial annual payment that starts at $10,000 and grows at 5% per year. Plan B has a flat payment of $12,500 for the 10 years. a. Which 10 year annuity is better, if the annual r=8%? b. At what discount rate would the annuity owner be indifferent between the two plans?

Buying the Car Now → Present Value Today or Payment Plan? A local car dealer has...

Buying the Car Now → Present Value Today or Payment Plan? A local car dealer has a used car that would suit Akash. The dealer is offering monthly payments of $300 for 2 years. The payment plan already includes interest at 9% per annum, compounded monthly. 1. How much will Akash pay in total if he decides to use the payment plan of $300 per month for 2 years? 2. How much will he pay for the car if he...

A payment system starts with an initial payment of $40 at the end of year 1,...

A payment system starts with an initial payment of $40 at the end of year 1, $42.8 at the end of year 2, and a payment of $45.60 at the end of year 3. This payment system follows ............................... A. Either (geometric) or ( Arithmetic ) B. a geometric gradient C. Neither ( geometric ) nor ( Arithmetic ) D. Arithmetic Gradients

39.) A 3-year fixed payment loan has an annual payment of $906. The interest rate for...

39.) A 3-year fixed payment loan has an annual payment of $906. The interest rate for the loan is 7.7%. What is the duration (in years) of the fixed-payment loan? Round your answer to at least 2 decimal places.

An annuity-immediate with 20 annual payments starts with a payment of 300 and each payment thereafter...

An annuity-immediate with 20 annual payments starts with a payment of 300 and each payment thereafter is 25 more than the previous payment. The effective annual interest rate is 5%. Calculate the present value. Be sure to include the appropriate equation or expression of value that you use. Instead of a 20 year annuity-immediate, it is a perpetuity. What would the present value be in that case?

Fantasy Corp. has borrowed to invest in a project. The loan calls for a payment of...

Fantasy Corp. has borrowed to invest in a project. The loan calls for a payment of $20,000 every month for four years. The lender quoted Fantasy a rate of 9.60 percent with monthly compounding. At what rate would you discount the payments to find the amount borrowed by Fantasy Corp.? (Round to two decimal places.)

Develop the payment table for a balloon payment loan $125,000 loan, 10 years, 10% interest rate,...

Develop the payment table for a balloon payment loan $125,000 loan, 10 years, 10% interest rate, balloon payment of $100,000 Year Total Payment Interest Paid Principal Paid Principal Remaining Balloon

Problem C The following data are for Toy Company: December 31 Current Prior Prepaid expenses $34,500...

Problem C The following data are for Toy Company: December 31 Current Prior Prepaid expenses $34,500 $45,000 Accrued liabilities (short term) 210,000 186,000 Cash in Bank 1,095,000 975,000 Wages payable -0- 37,500 Accounts payable 714,000 585,000 Merchandise inventory 1,342,500 1,437,000 Bonds payable, due in 2005 615,000 594,000 Marketable securities (short term) 217,500 147,000 Notes payable (due in six months) 300,000 195,000 Accounts receivable 907,500 870,000 Allowance for doubtful accounts (72,000) (57,000) Cash flow from operating activities 192,000 180,000 Compute the...

The monthly payment on a loan may be calculated by the following formula: Payment = Rate *...

The monthly payment on a loan may be calculated by the following formula: Payment = Rate * (1 + Rate)N ((1 + Rate)N -1) Rate is the monthly interest rate, which is the annual interest rate divided by 12. (12 percent annual interest would be 1 percent monthly interest.) N is the number of payments, and L is the amount of the loan. Write a program that asks for these (Input) values then displays a report similar to: Loan Amount: $...

Compute the payment for year 2 for the following adjustable rate mortgage. The loan has an...

Compute the payment for year 2 for the following adjustable rate mortgage. The loan has an annual adjustment period, is indexed to the one-year Treasury Bill, and carries a margin of 2%. The original composite rate was not a teaser and was equal to 4%. The one-year T-bill rate decreased 0.5% at the start of year 2. The loan was 80% loan-to-value on a property worth $220,000, and it was fully amortizing over a term of 30 years.

Subjects