Question
In: Finance
1. a) Ali obtained a Kshs. 500,000 loan payable over 8 year period amortized at 12%...
1. a) Ali obtained a Kshs. 500,000 loan payable over 8 year
period amortized at 12% interest with annual payments. Prepare a
loan amortization schedule showing the loan balances at the end of
the year under constant payment Amortization.
b) A mortgage creates a right of security interest in the real
property for the lender. What are the requirements from the lenders
for valid mortgage contracts?
Solutions
Expert Solution
Ans 1)
| P = | Regular Payments | |||
| PV = | Loan Amount | |||
| r = | rate of interest | |||
| n = | no of periods | |||
| P = | r (PV) | |||
| 1 - (1 + r )-n | ||||
| P = | (12%/12)*500000 | |||
| 1 - (1 / (1 + 12%/12)^96)) | ||||
| P = | 5000 | |||
| 0.61527703 | ||||
| P = | 8126.42 | |||
| Beginning Balance | Interest | Principal | Ending Balance | |
| 1 | $500,000.00 | $5,000.00 | $3,126.42 | $496,873.58 |
| 2 | $496,873.58 | $4,968.74 | $3,157.68 | $493,715.89 |
| 3 | $493,715.89 | $4,937.16 | $3,189.26 | $490,526.63 |
| 4 | $490,526.63 | $4,905.27 | $3,221.15 | $487,305.48 |
| 5 | $487,305.48 | $4,873.05 | $3,253.37 | $484,052.11 |
| 6 | $484,052.11 | $4,840.52 | $3,285.90 | $480,766.21 |
| 7 | $480,766.21 | $4,807.66 | $3,318.76 | $477,447.45 |
| 8 | $477,447.45 | $4,774.47 | $3,351.95 | $474,095.51 |
| 9 | $474,095.51 | $4,740.96 | $3,385.47 | $470,710.04 |
| 10 | $470,710.04 | $4,707.10 | $3,419.32 | $467,290.72 |
| 11 | $467,290.72 | $4,672.91 | $3,453.51 | $463,837.21 |
| 12 | $463,837.21 | $4,638.37 | $3,488.05 | $460,349.16 |
| Year #1 End | ||||
| 13 | $460,349.16 | $4,603.49 | $3,522.93 | $456,826.23 |
| 14 | $456,826.23 | $4,568.26 | $3,558.16 | $453,268.07 |
| 15 | $453,268.07 | $4,532.68 | $3,593.74 | $449,674.33 |
| 16 | $449,674.33 | $4,496.74 | $3,629.68 | $446,044.65 |
| 17 | $446,044.65 | $4,460.45 | $3,665.97 | $442,378.68 |
| 18 | $442,378.68 | $4,423.79 | $3,702.63 | $438,676.05 |
| 19 | $438,676.05 | $4,386.76 | $3,739.66 | $434,936.39 |
| 20 | $434,936.39 | $4,349.36 | $3,777.06 | $431,159.33 |
| 21 | $431,159.33 | $4,311.59 | $3,814.83 | $427,344.50 |
| 22 | $427,344.50 | $4,273.45 | $3,852.98 | $423,491.53 |
| 23 | $423,491.53 | $4,234.92 | $3,891.51 | $419,600.02 |
| 24 | $419,600.02 | $4,196.00 | $3,930.42 | $415,669.60 |
| Year #2 End | ||||
| 25 | $415,669.60 | $4,156.70 | $3,969.72 | $411,699.88 |
| 26 | $411,699.88 | $4,117.00 | $4,009.42 | $407,690.45 |
| 27 | $407,690.45 | $4,076.90 | $4,049.52 | $403,640.94 |
| 28 | $403,640.94 | $4,036.41 | $4,090.01 | $399,550.93 |
| 29 | $399,550.93 | $3,995.51 | $4,130.91 | $395,420.02 |
| 30 | $395,420.02 | $3,954.20 | $4,172.22 | $391,247.79 |
| 31 | $391,247.79 | $3,912.48 | $4,213.94 | $387,033.85 |
| 32 | $387,033.85 | $3,870.34 | $4,256.08 | $382,777.77 |
| 33 | $382,777.77 | $3,827.78 | $4,298.64 | $378,479.13 |
| 34 | $378,479.13 | $3,784.79 | $4,341.63 | $374,137.50 |
| 35 | $374,137.50 | $3,741.37 | $4,385.05 | $369,752.45 |
| 36 | $369,752.45 | $3,697.52 | $4,428.90 | $365,323.56 |
| Year #3 End | ||||
| 37 | $365,323.56 | $3,653.24 | $4,473.19 | $360,850.37 |
| 38 | $360,850.37 | $3,608.50 | $4,517.92 | $356,332.45 |
| 39 | $356,332.45 | $3,563.32 | $4,563.10 | $351,769.36 |
| 40 | $351,769.36 | $3,517.69 | $4,608.73 | $347,160.63 |
| 41 | $347,160.63 | $3,471.61 | $4,654.81 | $342,505.82 |
| 42 | $342,505.82 | $3,425.06 | $4,701.36 | $337,804.45 |
| 43 | $337,804.45 | $3,378.04 | $4,748.38 | $333,056.08 |
| 44 | $333,056.08 | $3,330.56 | $4,795.86 | $328,260.22 |
| 45 | $328,260.22 | $3,282.60 | $4,843.82 | $323,416.40 |
| 46 | $323,416.40 | $3,234.16 | $4,892.26 | $318,524.14 |
| 47 | $318,524.14 | $3,185.24 | $4,941.18 | $313,582.96 |
| 48 | $313,582.96 | $3,135.83 | $4,990.59 | $308,592.37 |
| Year #4 End | ||||
| 49 | $308,592.37 | $3,085.92 | $5,040.50 | $303,551.87 |
| 50 | $303,551.87 | $3,035.52 | $5,090.90 | $298,460.97 |
| 51 | $298,460.97 | $2,984.61 | $5,141.81 | $293,319.16 |
| 52 | $293,319.16 | $2,933.19 | $5,193.23 | $288,125.93 |
| 53 | $288,125.93 | $2,881.26 | $5,245.16 | $282,880.77 |
| 54 | $282,880.77 | $2,828.81 | $5,297.61 | $277,583.16 |
| 55 | $277,583.16 | $2,775.83 | $5,350.59 | $272,232.57 |
| 56 | $272,232.57 | $2,722.33 | $5,404.10 | $266,828.47 |
| 57 | $266,828.47 | $2,668.28 | $5,458.14 | $261,370.34 |
| 58 | $261,370.34 | $2,613.70 | $5,512.72 | $255,857.62 |
| 59 | $255,857.62 | $2,558.58 | $5,567.84 | $250,289.78 |
| 60 | $250,289.78 | $2,502.90 | $5,623.52 | $244,666.25 |
| Year #5 End | ||||
| 61 | $244,666.25 | $2,446.66 | $5,679.76 | $238,986.49 |
| 62 | $238,986.49 | $2,389.86 | $5,736.56 | $233,249.94 |
| 63 | $233,249.94 | $2,332.50 | $5,793.92 | $227,456.02 |
| 64 | $227,456.02 | $2,274.56 | $5,851.86 | $221,604.16 |
| 65 | $221,604.16 | $2,216.04 | $5,910.38 | $215,693.78 |
| 66 | $215,693.78 | $2,156.94 | $5,969.48 | $209,724.29 |
| 67 | $209,724.29 | $2,097.24 | $6,029.18 | $203,695.12 |
| 68 | $203,695.12 | $2,036.95 | $6,089.47 | $197,605.65 |
| 69 | $197,605.65 | $1,976.06 | $6,150.36 | $191,455.28 |
| 70 | $191,455.28 | $1,914.55 | $6,211.87 | $185,243.42 |
| 71 | $185,243.42 | $1,852.43 | $6,273.99 | $178,969.43 |
| 72 | $178,969.43 | $1,789.69 | $6,336.73 | $172,632.70 |
| Year #6 End | ||||
| 73 | $172,632.70 | $1,726.33 | $6,400.09 | $166,232.61 |
| 74 | $166,232.61 | $1,662.33 | $6,464.09 | $159,768.51 |
| 75 | $159,768.51 | $1,597.69 | $6,528.74 | $153,239.78 |
| 76 | $153,239.78 | $1,532.40 | $6,594.02 | $146,645.76 |
| 77 | $146,645.76 | $1,466.46 | $6,659.96 | $139,985.79 |
| 78 | $139,985.79 | $1,399.86 | $6,726.56 | $133,259.23 |
| 79 | $133,259.23 | $1,332.59 | $6,793.83 | $126,465.40 |
| 80 | $126,465.40 | $1,264.65 | $6,861.77 | $119,603.63 |
| 81 | $119,603.63 | $1,196.04 | $6,930.38 | $112,673.25 |
| 82 | $112,673.25 | $1,126.73 | $6,999.69 | $105,673.56 |
| 83 | $105,673.56 | $1,056.74 | $7,069.69 | $98,603.88 |
| 84 | $98,603.88 | $986.04 | $7,140.38 | $91,463.49 |
| Year #7 End | ||||
| 85 | $91,463.49 | $914.63 | $7,211.79 | $84,251.71 |
| 86 | $84,251.71 | $842.52 | $7,283.90 | $76,967.81 |
| 87 | $76,967.81 | $769.68 | $7,356.74 | $69,611.06 |
| 88 | $69,611.06 | $696.11 | $7,430.31 | $62,180.75 |
| 89 | $62,180.75 | $621.81 | $7,504.61 | $54,676.14 |
| 90 | $54,676.14 | $546.76 | $7,579.66 | $47,096.48 |
| 91 | $47,096.48 | $470.96 | $7,655.46 | $39,441.02 |
| 92 | $39,441.02 | $394.41 | $7,732.01 | $31,709.01 |
| 93 | $31,709.01 | $317.09 | $7,809.33 | $23,899.68 |
| 94 | $23,899.68 | $239.00 | $7,887.42 | $16,012.26 |
| 95 | $16,012.26 | $160.12 | $7,966.30 | $8,045.96 |
| 96 | $8,045.96 | $80.46 | $8,045.96 | $0.00 |
| Year #8 End | ||||
jeff jeffy answered 2 years agoRelated Solutions
An $8000 loan is to be amortized with equal monthly payments over a 2 year period...
An $8000 loan is to be amortized with equal monthly payments
over a 2 year
period at j (12) = 8 %. Find the outstanding principal after 7
months and split the
8 th payment into principal and interest portions.
outstanding principal after 7 months is?
the principal in the 8 th payment is?
the interest in the 8 th payment is?
Ali has a $35,000 student loan at 4.40% compounded monthly amortized over 10 years with payments...
Ali has a $35,000 student loan at 4.40% compounded monthly
amortized over 10 years with payments made at the end of every
quarter.
a. What is the size of Ali's payments at the
end of every quarter?
b. What was the principal portion of payment
13?
c. What was the size of Ali's' final
payment?
You borrow $400,000 over a 20 year term. The loan is structured as an amortized loan...
You borrow $400,000 over a 20 year term. The loan is structured
as an amortized loan with annual payments and an interest rate of
8%. Complete the cells in the amortization schedule below.
Year
Payment ($)
Interest in Payment ($)
Principal
Repaid ($)
Principal Owing at End of Year ($)
1
2
You borrow $400,000 over a 20 year term. The loan is structured as an amortized loan...
You borrow $400,000 over a 20 year term. The loan is
structured as an amortized loan with annual payments and an
interest rate of 8%. Complete the cells in the amortization
schedule below.
Year
Payment ($)
Interest in Payment ($)
Principal
Repaid ($)
Principal Owing at End of Year ($)
1
2
On January 1, 2017, your brother's business obtained a 30-year amortized mortgage loan for $350,000 at...
On January 1, 2017, your brother's business obtained a 30-year
amortized mortgage loan for $350,000 at a nominal annual rate of
7.35%, with 360 end-of-month payments. The firm can deduct the
interest paid for tax purposes. What will the interest tax
deduction be for 2018 (second-year interest expense on the
mortgage)? Answer--$25,361.98
Determine the annual payment on a $19,500 loan that is to be amortized over a four-year...
Determine the annual payment on a $19,500 loan that is to be
amortized over a four-year period and carries a 10 percent interest
rate. Also prepare a loan amortization schedule for this
loan.
Determine the annual payment on a $17,000 loan that is to be amortized over a four-year...
Determine the annual payment on a $17,000 loan that is to be
amortized over a four-year period and carries a 10 percent interest
rate. Also prepare a loan amortization schedule for this
loan.
1. The payment made each period on an amortized loan is constant, and it consists of...
1. The payment made each period on an amortized loan is
constant, and it consists of some interest and some principal.
Which of the following statement is correct?
2. If a bank compounds savings accounts annually, the effective
annual rate is greater than the nominal rate.
True False
3. The present value of a future cash flow will be greater if we
increase the discounted interest rate and compound more
frequently. True False
4. A bank loan has annual percentage...
QUESTION 1 A $150,000 loan is to be amortized over 7 years, with annual end-of-year payments....
QUESTION 1
A $150,000 loan is to be amortized over 7 years, with annual
end-of-year payments. Which of these statements is CORRECT?
a.
The proportion of interest versus principal repayment would be
the same for each of the 7 payments.
b.
The proportion of each payment that represents interest versus
repayment of principal would be higher if the interest rate were
higher.
c.
The proportion of each payment that represents interest as
opposed to repayment of principal would be higher...
7.) On January 1, 2013, your brother's business obtained a 30-year amortized mortgage loan for $350,000...
7.) On January 1, 2013, your brother's business obtained a
30-year amortized mortgage loan for $350,000 at a nominal annual
rate of 7.35%, with 360 end-of-month payments. The firm can deduct
the interest paid for tax purposes. What will the interest tax
deduction be for 2016.
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- How do autobiographical memories change across the lifespan? That is, what is the relationship between one’s...
- Create a Binary Search Tree with the following elements in the order mentioned below: 5, 85,...
- write a MIPS program to ask user to input the number of elements of array
- A disk drive has 300 cylinders, numbered 0 to 299. The drive is currently serving a...
- Write a function that tells whether a hailstone sequence contains a number that is greater than...
- 1D List Practice Could you write the code to solve the following problem that uses 1D...
- How the concept of moral hazard can be applied to the 2008 financial crisis?
ADVERTISEMENT