Question

On January 1, Vixen, Inc. purchased a new sleigh packing machine, costing $62,500, by signing a promissory note with 7-year, 4.75% terms with biannual payments. Show the entire amortization schedule and highlight the total, interest and principal payment for payment number 13. Also, specify what year/month this payment occurs.

please show on excel

Answer 1

Period	Date	Year	Installment	Interest expenses		Decrease in Balance		Ending Baance
0	January 1							$       62,500
1	June 30	1	$      5,300	$      1,484		$      3,815		$       58,685
2	December 31	1	$      5,300	$      1,394		$      3,906		$       54,778
3	June 30	2	$      5,300	$      1,301		$      3,999		$       50,780
4	December 31	2	$      5,300	$      1,206		$      4,094		$       46,686
5	June 30	3	$      5,300	$      1,109		$      4,191		$       42,495
6	December 31	3	$      5,300	$      1,009		$      4,291		$       38,204
7	June 30	4	$      5,300	$        907		$      4,393		$       33,812
8	December 31	4	$      5,300	$        803		$      4,497		$       29,315
9	June 30	5	$      5,300	$        696		$      4,604		$       24,711
10	December 31	5	$      5,300	$        587		$      4,713		$       19,998
11	June 30	6	$      5,300	$        475		$      4,825		$       15,173
12	December 31	6	$      5,300	$        360		$      4,939		$       10,234
13	June 30	7	$      5,300	$        243		$      5,057		$         5,177
14	December 31	7	$      5,300	$        123		$      5,177		$              -0
	Total		$    74,198	$    11,698		$    62,500
Working:
	Semi annual payments		=	Cost/Cumulative discount factor
			=	$    62,500	/	11.7928
			=	$      5,300
	Cumulative discount factor		=	(1-(1+i)^-n)/i			Where,
			=	(1-(1+0.02375)^-14)/0.02375			i	4.75%/2	=	0.02375
			=	11.7928			n	7*2	=	14
	Interest expenses		=	Beginning Balance * Interest rate * Time
			=	62500*4.75%*6/12
			=	$      1,484