On September 1, 2013, Susan Chao bought a motorcycle for $21,000. She paid $1,100 down and...

On September 1, 2013, Susan Chao bought a motorcycle for $21,000. She paid $1,100 down and financed the balance with a five-year loan at an APR of 6.3 percent, compounded monthly. She started the monthly payments exactly one month after the purchase (i.e., October 1, 2013). Two years later, at the end of October 2015, Susan got a new job and decided to pay off the loan. If the bank charges her a 2 percent prepayment penalty based on the loan balance, how much must she pay the bank on November 1, 2015? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Expert Solution

EMI = P*i*(1+i)^n/[{(1+i)^n}-1]

Where,

P = Principal = 21000-1100 = 19900

i= Interest Rate = 0.063/12 = 0.00525

n= Number of periods = 5*12 = 60

Therefore, EMI = 19900*0.00525*(1+0.00525)^60/[{(1+0.00525)^60}-1]

= 104.475*(1.36913)/[1.36913-1] = 143.0399/0.36913 = $387.51

October 1, 2013 to October 1, 2015 are 25 Installments.

Period	Opening Principal (previous closing)	Interest (opening*0.00525)	Installment	Principal Repayment (installment-interest)	Closing Principal (opening-principal repayment)
1	19900	104.475	387.51	283.035	19616.965
2	19616.965	102.9890663	387.51	284.520934	19332.4441
3	19332.4441	101.4953313	387.51	286.014669	19046.4294
4	19046.4294	99.99375434	387.51	287.516246	18758.9132
5	18758.9132	98.48429405	387.51	289.025706	18469.8874
6	18469.8874	96.96690909	387.51	290.543091	18179.3444
7	18179.3444	95.44155786	387.51	292.068442	17887.2759
8	17887.2759	93.90819854	387.51	293.601801	17593.6741
9	17593.6741	92.36678909	387.51	295.143211	17298.5309
10	17298.5309	90.81728723	387.51	296.692713	17001.8382
11	17001.8382	89.25965049	387.51	298.25035	16703.5878
12	16703.5878	87.69383615	387.51	299.816164	16403.7717
13	16403.7717	86.11980129	387.51	301.390199	16102.3815
14	16102.3815	84.53750275	387.51	302.972497	15799.409
15	15799.409	82.94689714	387.51	304.563103	15494.8459
16	15494.8459	81.34794085	387.51	306.162059	15188.6838
17	15188.6838	79.74059004	387.51	307.76941	14880.9144
18	14880.9144	78.12480063	387.51	309.385199	14571.5292
19	14571.5292	76.50052834	387.51	311.009472	14260.5197
20	14260.5197	74.86772861	387.51	312.642271	13947.8775
21	13947.8775	73.22635669	387.51	314.283643	13633.5938
22	13633.5938	71.57636756	387.51	315.933632	13317.6602
23	13317.6602	69.91771599	387.51	317.592284	13000.0679
24	13000.0679	68.2503565	387.51	319.259644	12680.8083
25	12680.8083	66.57424337	387.51	320.935757	12359.8725
26	12359.8725	64.88933065	0	-64.8893306	12424.7618

Upto 25th Installment i.e. Upto October 1, 2015, Regular Installment will be paid. But, on 26th Installmet i.e. November 1, 2015, It will Not be paid.

Balance as on November 1, 2015 = $12424.76

Amount Payable to Pay Off the Loan = Balance as on November 1, 2015 + Penalty = 12424.76+2% = $12673.26

Amount to be paid

jeff jeffy answered 1 year ago

On September 1, 2013, Susan Chao bought a motorcycle for $27,000. She paid $1,100 down and...

On September 1, 2013, Susan Chao bought a motorcycle for $27,000. She paid $1,100 down and financed the balance with a five-year loan at an APR of 6.9 percent, compounded monthly. She started the monthly payments exactly one month after the purchase (i.e., October 1, 2013). Two years later, at the end of October 2015, Susan got a new job and decided to pay off the loan. If the bank charges her a 2 percent prepayment penalty based on...

On September 1, 2018, Susan Chao bought a motorcycle for $32,000. She paid $1,200 down and...

On September 1, 2018, Susan Chao bought a motorcycle for $32,000. She paid $1,200 down and financed the balance with a five-year loan at an annual percentage rate of 7.4 percent compounded monthly. She started the monthly payments exactly one month after the purchase (i.e., October 1, 2018). Two years later, at the end of October 2020, Susan got a new job and decided to pay off the loan. If the bank charges her a 1 percent prepayment penalty...

Tara bought a condo. She paid 22% down and is going to make payments for 20...

Tara bought a condo. She paid 22% down and is going to make payments for 20 years. She locked in the rate for five years. Which of the following statements is not true? The interest rate cannot change for five years. The way she has set this up, she will pay off the entire loan in 20 years. The amortization period is five years. The term is five years.

(Loan amortization) On December 31, Beth Klemkosky bought a yacht for $100,000. She paid $20,000 down...

(Loan amortization) On December 31, Beth Klemkosky bought a yacht for $100,000. She paid $20,000 down and agreed to pay the balance in 14 equal annual installments that include both the principal and 15 percent interest on the declining balance. How big will the annual payments be? On December 31, Beth Klemkosky bought a yacht for $100,000 and paid $20,000 down, how much does she need to borrow to purchase the yacht?

1. Lisa bought an equestrian facility for $875,000. She put $25,000 down with the balance to...

1. Lisa bought an equestrian facility for $875,000. She put $25,000 down with the balance to be paid out over 25 years. The terms of the mortgage require equal payments at the end of each month. Interest on the mortgage is 2.95% compounded semi-annually and the mortgage is renewable after five years. a. What is the size of each monthly payment? b. Prepare an amortization schedule for the first five year term. Make sure your values are rounded (not just...

On September 29, 2018, Susie bought office furniture for $150,000. She also bought business computers for...

On September 29, 2018, Susie bought office furniture for $150,000. She also bought business computers for $90,000 on October 1, 2018. On January 10, 2019, Susie placed all of the assets in service. Susie did not elect to expense any of the assets under § 179, did not elect straight-line cost recovery, and did not take additional first-year depreciation (if available). Determine the cost recovery deduction for the business assets for 2018 . a. $39,435. b. $14,290. c. $34,296. d....

Susan Huang began the practice of law October 1, 2017, with an initial investment of $21,000...

Susan Huang began the practice of law October 1, 2017, with an initial investment of $21,000 in cash. She made no withdrawals during the month. After completing the first month of practice, the financial statements were prepared by Ryan Player, the secretary/bookkeeper Ms. Huang had hired. Ms. Huang almost burst out laughing when she saw them. She had completed a course in legal accounting in law school and knew the statements prepared by Player left much to be desired. Consequently,...

Alexi's bought a home for $1,000,000 during year 1. She made a $200,000 down payment and...

Alexi's bought a home for $1,000,000 during year 1. She made a $200,000 down payment and financed the other $800,000. This home is her only residence. Assume that by year 10 her home had appreciated to $1,5000,000 and the balance on her mortgage was down to $600,000, interest rates had gone down and Alexis refinanced her home. She borrowed $1,000,000 and paid off her first mortgage. She used the remaining $400,000 for projects unrelated to her home. How much is...

Phil and Jill bought a fishing lodge for $750,000. They paid $75,000 down and agreed to...

Phil and Jill bought a fishing lodge for $750,000. They paid $75,000 down and agreed to make payments at the end of every month for fifteen years. Interest is 6% compounded quarterly. a) What size payments are the Phil and Jill making every month. b) How much will they owe after ten years? c) How much will they have paid in total after 15 years? d) How much interest will they pay in total?

Tables 1 and 2 show the quantities of the goods that Suzie bought and the prices she paid during two...

Tables 1 and 2 show the quantities of the goods that Suzie bought and the prices she paid during two consecutive weeks. Suzie’s CPI market basket contains the goods she bought in Week 1. Calculate the cost of Suzie’s CPI market basket in Week 1 and in Week 2. What percentage of the CPI market basket is gasoline? Calculate the value of Suzie’s CPI in Week 2 and her inflation rate in Week 2. Table 1 Data for Week 1 Item Quantity Price (per unit) Coffee...

Question