Question

In: Finance

Watkins Technology is purchasing computer software at a cost of $23,000. They are putting a down...

Watkins Technology is purchasing computer software at a cost of $23,000. They are putting a down payment of $3,000 and will borrow the remainder. They will amortize the loan for the software in equal 48 monthly installments at an interest rate of 14%. Prepare an amortization schedule for the first two payments. SHOW ALL WORK!

                                                                                                                       

Payment

Number

Amount of Payment

Interest for

Period

Portion to Principal

Principal Balance at End of Period

0

1

2

Solutions

Expert Solution

Loan amount $20,000
Loan term (in years) 4
Interest rate 14.00%
Payment frequency 12.00
Monthly Loan payment $546.53
Payment number Amount of payment Interest for period Portion to principal Principal balance at end of period
0 $20,000
1 $546.53 $233.33 $313.20 $19,686.80
2 $546.53 $229.68 $316.85 $19,369.95
Total $1,093.06 $463.01 $630.05

Calculations and formulas

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

If the demand for computer software increases, while software-making technology improves, what happens to the market...
If the demand for computer software increases, while software-making technology improves, what happens to the market equilibrium in the software market?
"A firm is considering purchasing a computer system. -Cost of system is $191,000. The firm will...
"A firm is considering purchasing a computer system. -Cost of system is $191,000. The firm will pay for the computer system in year 0. -Project life: 5 years -Salvage value in year 0 (constant) dollars: $13,000 -Depreciation method: five-years MACRS -Marginal income-tax rate = 37% (remains constant over time) -Annual revenue = $146,000 (year-0 constant dollars) -Annual expenses (not including depreciation) = $77,000 (year-0 constant dollars) If the general inflation rate is 3.7% during the project period (which will affect...
"A firm is considering purchasing a computer system. -Cost of system is $128,000. The firm will...
"A firm is considering purchasing a computer system. -Cost of system is $128,000. The firm will pay for the computer system in year 0. -Project life: 5 years -Salvage value in year 0 (constant) dollars: $12,000 -Depreciation method: five-years MACRS -Marginal income-tax rate = 37% (remains constant over time) -Annual revenue = $128,000 (year-0 constant dollars) -Annual expenses (not including depreciation) = $94,000 (year-0 constant dollars) If the general inflation rate is 2.6% during the project period (which will affect...
"A firm is considering purchasing a computer system. -Cost of system is $188,000. The firm will...
"A firm is considering purchasing a computer system. -Cost of system is $188,000. The firm will pay for the computer system in year 0. -Project life: 4 years -Salvage value in year 0 (constant) dollars: $24,000 -Depreciation method: five-years MACRS -Marginal income-tax rate = 40% (remains constant over time) -Annual revenue = $141,000 (year-0 constant dollars) -Annual expenses (not including depreciation) = $75,000 (year-0 constant dollars) If the general inflation rate is 2.1% during the project period (which will affect...
"A firm is considering purchasing a computer system. -Cost of system is $199,000. The firm will...
"A firm is considering purchasing a computer system. -Cost of system is $199,000. The firm will pay for the computer system in year 0. -Project life: 5 years -Salvage value in year 0 (constant) dollars: $17,000 -Depreciation method: five-years MACRS -Marginal income-tax rate = 40% (remains constant over time) -Annual revenue = $144,000 (year-0 constant dollars) -Annual expenses (not including depreciation) = $91,000 (year-0 constant dollars) If the general inflation rate is 4.1% during the project period (which will affect...
"A firm is considering purchasing a computer system. -Cost of system is $112,000. The firm will...
"A firm is considering purchasing a computer system. -Cost of system is $112,000. The firm will pay for the computer system in year 0. -Project life: 5 years -Salvage value in year 0 (constant) dollars: $23,000 -Depreciation method: five-years MACRS -Marginal income-tax rate = 37% (remains constant over time) -Annual revenue = $127,000 (year-0 constant dollars) -Annual expenses (not including depreciation) = $96,000 (year-0 constant dollars) -The general inflation rate is 3.6% during the project period (which will affect all...
"A firm is considering purchasing a computer system. -Cost of system is $176,000. The firm will...
"A firm is considering purchasing a computer system. -Cost of system is $176,000. The firm will pay for the computer system in year 0. -Project life: 6 years -Salvage value in year 0 (constant) dollars: $17,000 -Depreciation method: five-years MACRS -Marginal income-tax rate = 37% (remains constant over time) -Annual revenue = $121,000 (year-0 constant dollars) -Annual expenses (not including depreciation) = $85,000 (year-0 constant dollars) -The general inflation rate is 2.8% during the project period (which will affect all...
"A firm is considering purchasing a computer system. -Cost of system is $198,000. The firm will...
"A firm is considering purchasing a computer system. -Cost of system is $198,000. The firm will pay for the computer system in year 0. -Project life: 5 years -Salvage value in year 0 (constant) dollars: $10,000 -Depreciation method: five-years MACRS -Marginal income-tax rate = 40% (remains constant over time) -Annual revenue = $147,000 (year-0 constant dollars) -Annual expenses (not including depreciation) = $88,000 (year-0 constant dollars) -The general inflation rate is 4.9% during the project period (which will affect all...
"A firm is considering purchasing a computer system. -Cost of system is $198,000. The firm will...
"A firm is considering purchasing a computer system. -Cost of system is $198,000. The firm will pay for the computer system in year 0. -Project life: 5 years -Salvage value in year 0 (constant) dollars: $10,000 -Depreciation method: five-years MACRS -Marginal income-tax rate = 40% (remains constant over time) -Annual revenue = $147,000 (year-0 constant dollars) -Annual expenses (not including depreciation) = $88,000 (year-0 constant dollars) -The general inflation rate is 4.9% during the project period (which will affect all...
"A firm is considering purchasing a computer system. -Cost of system is $198,000. The firm will...
"A firm is considering purchasing a computer system. -Cost of system is $198,000. The firm will pay for the computer system in year 0. -Project life: 5 years -Salvage value in year 0 (constant) dollars: $10,000 -Depreciation method: five-years MACRS -Marginal income-tax rate = 40% (remains constant over time) -Annual revenue = $147,000 (year-0 constant dollars) -Annual expenses (not including depreciation) = $88,000 (year-0 constant dollars) -The general inflation rate is 4.9% during the project period (which will affect all...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT