Question

In: Finance

A loan is repaid in ten equal annual installments with the first installment paid one year...

A loan is repaid in ten equal annual installments with the first installment paid one year after the loan is made. The effective annual interest rate is 4%. The total amount of principal repaid in the fifth, sixth, and seventh payments combined is $6,083. What is the total amount of interest paid in the second, third, and fourth payments combined?

  1. Less than $2,000

  2. At least $2,000, but less than $2,020

  3. At least $2,020, but less than $2,040

  4. At least $2,040, but less than $2,060

  5. $2,060 or more

Solutions

Expert Solution

By hit and trial of total amount of principal in 5th, 6th and 7th payment combined We find that Amount of principal or loan=20000

Amortization Schedule:

Payment Loan beginning balance Payment Interest payment Principal payment Loan ending balance
1 20000 $2,465.82 $800.00 $1,665.82 $18,334.18
2 $18,334.18 $2,465.82 $733.37 $1,732.45 $16,601.73
3 $16,601.73 $2,465.82 $664.07 $1,801.75 $14,799.98
4 $14,799.98 $2,465.82 $592.00 $1,873.82 $12,926.16
5 $12,926.16 $2,465.82 $517.05 $1,948.77 $10,977.39
6 $10,977.39 $2,465.82 $439.10 $2,026.72 $8,950.66
7 $8,950.66 $2,465.82 $358.03 $2,107.79 $6,842.87
8 $6,842.87 $2,465.82 $273.71 $2,192.10 $4,650.77
9 $4,650.77 $2,465.82 $186.03 $2,279.79 $2,370.98
10 $2,370.98 $2,465.82 $94.84 $2,370.98 ($0.00)

Amount of interest in 2nd 3rd and 4th payment combined=1989.44 i.e., Less than $2,000


Related Solutions

A loan is repaid in nine equal annual installments. The first payment is due one year...
A loan is repaid in nine equal annual installments. The first payment is due one year after the loan is made. The effective annual interest rate is 5%. The total amount of interest paid in the third, fourth, and fifth payments combined is $3798. What is the total amount of principal repaid in the seventh, eighth, and ninth payments combined? Choices: Less than $13,600 At least $13,600, but less than $13,700 At least $13,700, but less than $13,800 At least...
The interest-bearing loan is repaid in equal installments, paid monthly. First installment after 10 months, last...
The interest-bearing loan is repaid in equal installments, paid monthly. First installment after 10 months, last after 8 years. During the deferral period, interest is paid monthly (9 times). The annual interest rate of EUR 97000 credit, capitalized monthly, is 5.10%. (a) Calculate the monthly contribution. (b) How much interest is paid in installments after 6 years and 1 month? (c) How much credit is repaid in year 7 (starting with the contribution after 6 years and 1 month, ending...
A loan of Rs 7,00,000 is to be paid in 5 equal annual installments. If the...
A loan of Rs 7,00,000 is to be paid in 5 equal annual installments. If the rate of interest is 10% pa compounded annually. Find the amount of each annual installment and also prepare the loan amortization schedule. please try to give answer within 1Hr
A loan of Rs 5,00,000 is to be paid in 5 equal annual installments. If the...
A loan of Rs 5,00,000 is to be paid in 5 equal annual installments. If the rate of interest is 10% p.a compounded annually. Find the amount of each annual installment and also prepare the loan amortization schedule.
Consider a $35,000 loan to be repaid in equal installments at the end of each of...
Consider a $35,000 loan to be repaid in equal installments at the end of each of the next 5 years. The interest rate is 6%. Set up an amortization schedule for the loan. Round your answers to the nearest cent. Enter "0" if required Year Payment Repayment Interest Repayment of Principal Balance 1 $   $   $   $   2 $   $   $   $   3 $   $   $   $   4 $   $   $   $   5 $   $   $   $   Total $   $  ...
a. Complete an amortization schedule for a $44,000 loan to be repaid in equal installments at...
a. Complete an amortization schedule for a $44,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 11% compounded annually. Round all answers to the nearest cent. Beginning Repayment Ending Year Balance Payment Interest of Principal Balance 1 $   $   $   $   $   2 $   $   $   $   $   3 $   $   $   $   $   b. What percentage of the payment represents interest and what percentage represents principal...
a. Complete an amortization schedule for a $38,000 loan to be repaid in equal installments at...
a. Complete an amortization schedule for a $38,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 12% compounded annually. Round all answers to the nearest cent. Beginning Balance -Payment -Interest -Repayment of Principal -Ending Balance 1 $ $ $ $ $ 2 $ $ $ $ $ 3 $ $ $ $ $ b. What percentage of the payment represents interest and what percentage represents principal for...
a. complete an amortization schedule for a 33,000 loan to be repaid in equal installments at...
a. complete an amortization schedule for a 33,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 12% compounded annually. round all answers to the nearest cent. b. what percentage of the payment represents interest and what percentage represents principal for each of the three years? round all answers to two decimal places .
Consider a $30,000 loan to be repaid in equal installments at the end of each of...
Consider a $30,000 loan to be repaid in equal installments at the end of each of the next 5 years. The interest rate is 6%. Set up an amortization schedule for the loan. Do not round intermediate calculations. Round your answers to the nearest cent. If your answer is zero, enter "0". Year Payment Repayment Interest Repayment of Principal Balance 1 $   $   $   $   2 $   $   $   $   3 $   $   $   $   4 $   $   $   $  ...
Consider a $50,000 loan to be repaid in equal installments at the end of each of...
Consider a $50,000 loan to be repaid in equal installments at the end of each of the next 5 years. The interest rate is 10%. Set up an amortization schedule for the loan. Round your answers to the nearest cent. Enter "0" if required Year Payment Repayment Interest Repayment of Principal Balance 1 $    $    $    $    2 $    $    $    $    3 $    $    $    $    4 $    $    $    $    5 $    $    $    $    Total $    $   ...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT