Question

In: Finance

your company is planning to borrow $100000 on a 10 year 7% annual payment, fully amortized...

your company is planning to borrow $100000 on a 10 year 7% annual payment, fully amortized term loan. What fraction of the payment made at the end of the third year will represent repayment of principal?

Solutions

Expert Solution

PV = 100000
Rate = 7%
Number of Years = 10
Periodic payment
PMT = PV/(1-(1+r)-n)/r
PMT = 100000/(1-(1+7%)-10)/7% = 14237.75

Following amortisation table has been created in excel

Beginning Balance= 1000000 PMT =PMT(7%,10,-100000) Interest part of PMT=7%*Beginning Principal Principal part of PMT= PMT-Interest Ending Balance= Beginning balance-Principal part of PMT
1 100000 $14,237.75 7000 $7,237.75 $92,762.25
2 $92,762.25 $14,237.75 6493.357481 $7,744.39 $85,017.86
3 $85,017.86 $14,237.75 5951.249985 $8,286.50 $76,731.36
4 $76,731.36 $14,237.75 5371.194965 $8,866.56 $67,864.80
5 $67,864.80 $14,237.75 4750.536094 $9,487.21 $58,377.59
6 $58,377.59 $14,237.75 4086.431101 $10,151.32 $48,226.27
7 $48,226.27 $14,237.75 3375.838759 $10,861.91 $37,364.36
8 $37,364.36 $14,237.75 2615.504953 $11,622.25 $25,742.11
9 $25,742.11 $14,237.75 1801.947781 $12,435.80 $13,306.31
10 $13,306.31 $14,237.75 931.4416066 $13,306.31 $0.00


Principal Part fraction = 8286.50/14237.75 = 0.5820 or 58.20%

Please Discuss in case of Doubt

Best of Luck. God Bless
Please Rate Well


Related Solutions

Your company is planning to borrow $2.75 million on a 7-year, 15%, annual payment, fully amortized...
Your company is planning to borrow $2.75 million on a 7-year, 15%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places.
Your company is planning to borrow $1.5 million on a 3-year, 10%, annual payment, fully amortized...
Your company is planning to borrow $1.5 million on a 3-year, 10%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places.
Your company is planning to borrow $3 million on a 5-year, 10%, annual payment, fully amortized...
Your company is planning to borrow $3 million on a 5-year, 10%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Do not round intermediate calculations. Round your answer to two decimal places
Your company is planning to borrow $1.25 million on a 5-year, 14%, annual payment, fully amortized...
Your company is planning to borrow $1.25 million on a 5-year, 14%, annual payment, fully amortized term loan. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. What fraction of the payment made at the end of the second year will represent repayment of principal? Do not round intermediate calculations. Round your answer to two decimal places.
Your company is planning to borrow $1.75 million on a 5-year, 11%, annual payment, fully amortized...
Your company is planning to borrow $1.75 million on a 5-year, 11%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places.
Your company is planning to borrow $1.5 million on a 9-year, 14%, annual payment, fully amortized...
Your company is planning to borrow $1.5 million on a 9-year, 14%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places.
Your company is planning to borrow $3 million on a 5-year, 13%, annual payment, fully amortized...
Your company is planning to borrow $3 million on a 5-year, 13%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Do not round intermediate calculations. Round your answer to two decimal places.
Your company is planning to borrow $0.75 million on a 9-year, 9%, annual payment, fully amortized...
Your company is planning to borrow $0.75 million on a 9-year, 9%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places.
Your company is planning to borrow $1.75 million on a 5-year, 12%, annual payment, fully amortized...
Your company is planning to borrow $1.75 million on a 5-year, 12%, annual payment, fully amortized term loan. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Loan amount $1,750,000 Term in years 5 Annual coupon rate 12.00% Calculation of Loan Payment Formula Loan payment = #N/A Loan Amortization Schedule Year Beginning Balance Payment Interest Principal Ending Balance 1 2 3 4 5 Formulas...
Suppose you borrow $46,000 at 8.25% annual interest to be repaid with a fully amortized plan...
Suppose you borrow $46,000 at 8.25% annual interest to be repaid with a fully amortized plan over 14 years (equal end-of-year payments). What is the total amount of principal and interest paid?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT