Question

In: Finance

The amount of a loan is $100,000 with an interest rate of 8%. The life of...

The amount of a loan is $100,000 with an interest rate of 8%. The life of the loan is 4 years. Create a loan amortization table.

Solutions

Expert Solution

Assumption: The equal payment(PMT) towards the Loan is an annual Payment

PMT formula = Present Value / [ 1- ( 1+r)^-n]/ r
Annual payment =100000 / ((1-(1.08)^-4) /0.08)
Annual payment =100000 / (0.26497014) /0.08)
Annual payment =100000 / 3.31212684)
30192.08
Explanation:
Year 1
i) Interest payment will be (rate) * (principal)
8% * 100000  = 8000
ii) Annual Payment - interest portion = Payment towards principal
30192.08 - 8000 = 22192.08
iii) Ending balance of principal = Beginning Principal Balance - payment towards Principal for that year
100000 - 22192.08 = 77807.92
Year 2
i) Interest payment will be (rate) * (principal)
Interest portion 8% * 77807.92 (remaining principal) = 6224.63
ii) Annual Payment - interest portion = Payment towards principal
30192.08 - 6224.63 = 23967.45
iii) Ending balance of principal = Beginning Principal Balance - payment towards Principal for that year
77807.92 - 23967.45 = 53840.47
and so on for the next 2yrs

Yearbeginning balance Principal Ending balance 77807.92 53840.47 27955.6:3 0.00 Interest PaidPrincipal Paid PMT 30192.08 30192.08 30192.08 30192.08 1 100000 8000.00 6224.63 4307.24 2236.45 22192.08 23967.45 25884.84 27955.6:3 2 4


Related Solutions

Find the lender's yield for this loan: Loan amount: $100,000, Term: 25 years, Interest rate: 8%,...
Find the lender's yield for this loan: Loan amount: $100,000, Term: 25 years, Interest rate: 8%, Lender "points" and origination fee: 2,500, Third-party fees: $3,000. Assume the loan is held until the end of year 5.
A property costs $100,000. A borrower can obtain an 80% loan with an 8% interest rate...
A property costs $100,000. A borrower can obtain an 80% loan with an 8% interest rate and monthly payments. The loan is to be fully amortized over 25 years. Alternatively he could obtain a 90% loan at an 8.5% interest rate with the same loan term. (annualize percentages) A. The borrower plans to own the property for the entire loan term. What is the incremental cost of borrowing the additional funds? B. How would your answer change if two points...
1. What are the monthly payments for a $100,000 mortgage amount, 8 percent interest rate, and...
1. What are the monthly payments for a $100,000 mortgage amount, 8 percent interest rate, and a 30-year term? A - 8,883 B - 740 C - 734 D - 8,000 2. You are borrowing $10,000 to purchase a car. You plan to make monthly payments for 24 months, and the interest rate is 12%. What is your monthly payment? A - 471 B - 1,285 C - 371 D - 5,075
A borrower is offered a mortgage loan for $100,000 with an interest rate of 10% and...
A borrower is offered a mortgage loan for $100,000 with an interest rate of 10% and a 30-year amortization period with monthly payments. The origination fee is 1% of the loan and the lender charges two discount points. What is the effective interest rate? 10%, 9%, 10.37%, or 10.24%?
2. A What is the monthly payment amount on a $100,000 home loan if the rate...
2. A What is the monthly payment amount on a $100,000 home loan if the rate is 8.0% APR, and the loan is made for a 15-year period? B A four-year investment requires annual deposits of $300 at the beginning of each year. The deposits earn 6% per year. What is the investment’s future value? Remember, the deposits are made at the beginning of each year (annuity due).
A small business takes out a $100,000 loan on April 1, 2020. The loan interest rate...
A small business takes out a $100,000 loan on April 1, 2020. The loan interest rate is j4 = 6%. They are to repay the loan with quarterly payments of $4,000 for 5 years (first payment on July 1, 2020), followed by n quarterly payments of 5,000 for as long as necessary. Determine the total number of loan payments made and both the amount and calendar date of the smaller final payment made one quarter after the last 5,000 payment.
1) A 1 1/2 -year loan in the amount of $100,000 with 12% interest was taken...
1) A 1 1/2 -year loan in the amount of $100,000 with 12% interest was taken out on June 1, 2020. a) Calculate the interest for December 31. (Hint: From June 1 - Dec 31 -- use your fingers) Note Payable Entries b) Prepare the journal entry for the issuance of the Note Payable. c) Prepare the adjusting journal entry for interest expense – December 31, 2020    (HINT: found amount in a) d) Prepare the journal entry at maturity...
a borrower takes out a 15 year mortgage loan for 100,000 with an interest rate of...
a borrower takes out a 15 year mortgage loan for 100,000 with an interest rate of 5% plus 3 points. what is the effective annual interest rate on the loan if the loan is carried 15 years.
A bank makes a 10-year loan of $100,000 at an interest rate of 12%. What are...
A bank makes a 10-year loan of $100,000 at an interest rate of 12%. What are the monthly payments. What is the balance at the end of year 4?
A one-year, $100,000 loan carries a coupon rate and a market interest rate of 12 percent....
A one-year, $100,000 loan carries a coupon rate and a market interest rate of 12 percent. The loan requires payment of accrued interest and one-half of the principal at the end of six months. The remaining principal and accrued interest are due at the end of the year. A. what will be the cash flows at the end of six months and at the end of the year? B. What is the present value of each cash flow discounted at...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT