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
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