Question

In: Accounting

Assume you are to borrow money, the loan amount, at an annual interest rate to be...

Assume you are to borrow money, the loan amount, at an annual interest rate to be paid in equal installments each period.

Installment Loan Schedule
Loan Amount $25,000
Annual Interest Rate 9.90%
Periods per year 12
Years to payback 5
See Table B.3 in book.
Factor 47.17454194 FACTOR = [1 - (1 / ((1 + R)^n)]/ R
Equal Payments $529.95 let R = period interest rate
let n = number of periods to payback loan
Number of periods: 60
Reduction
Period Payment Interest Exp in Principal Principal
Borrowed money $25,000.00

Solutions

Expert Solution

  • All working forms part of the answer
  • Installment loan schedule is constructed based on information provided
  • Answer

Period

Payment (A) [Installment amount = $529.95]

Interest Exp [B = (D x 9.9%)x1/12]

Reduction in Principal [C= A – B]

Borrowed money Principal [D = D – C]

$         25,000.00

1

$              529.95

$                 206.25

$                 323.70

$         24,676.30

2

$              529.95

$                 203.58

$                 326.37

$         24,349.93

3

$              529.95

$                 200.89

$                 329.06

$         24,020.87

4

$              529.95

$                 198.17

$                 331.78

$         23,689.09

5

$              529.95

$                 195.43

$                 334.52

$         23,354.57

6

$              529.95

$                 192.68

$                 337.27

$         23,017.30

7

$              529.95

$                189.89

$                 340.06

$         22,677.24

8

$              529.95

$                 187.09

$                 342.86

$         22,334.38

9

$              529.95

$                 184.26

$                 345.69

$         21,988.69

10

$              529.95

$                 181.41

$                 348.54

$         21,640.14

11

$              529.95

$                 178.53

$                 351.42

$         21,288.73

12

$              529.95

$                 175.63

$                 354.32

$         20,934.41

13

$              529.95

$                 172.71

$                 357.24

$         20,577.17

14

$              529.95

$                 169.76

$                 360.19

$         20,216.98

15

$              529.95

$                 166.79

$                 363.16

$         19,853.82

16

$              529.95

$                163.79

$                 366.16

$         19,487.66

17

$              529.95

$                 160.77

$                 369.18

$         19,118.48

18

$              529.95

$                 157.73

$                372.22

$         18,746.26

19

$              529.95

$                 154.66

$                 375.29

$         18,370.97

20

$              529.95

$                 151.56

$                 378.39

$        17,992.58

21

$              529.95

$                 148.44

$                 381.51

$         17,611.07

22

$              529.95

$                 145.29

$                 384.66

$         17,226.41

23

$              529.95

$                 142.12

$                 387.83

$         16,838.58

24

$              529.95

$                 138.92

$                 391.03

$         16,447.55

25

$              529.95

$                 135.69

$                 394.26

$         16,053.29

26

$              529.95

$                 132.44

$                 397.51

$         15,655.78

27

$              529.95

$                 129.16

$                 400.79

$         15,254.99

28

$              529.95

$                 125.85

$                 404.10

$         14,850.89

29

$              529.95

$                 122.52

$                 407.43

$         14,443.46

30

$              529.95

$                 119.16

$                 410.79

$         14,032.67

31

$              529.95

$                 115.77

$                 414.18

$         13,618.49

32

$              529.95

$                 112.35

$                 417.60

$         13,200.89

33

$              529.95

$                 108.91

$                 421.04

$         12,779.85

34

$              529.95

$                 105.43

$                 424.52

$         12,355.33

35

$              529.95

$                 101.93

$                 428.02

$         11,927.31

36

$              529.95

$                    98.40

$                 431.55

$         11,495.76

37

$              529.95

$                    94.84

$                 435.11

$         11,060.66

38

$              529.95

$                    91.25

$                 438.70

$         10,621.96

39

$              529.95

$                    87.63

$                 442.32

$         10,179.64

40

$              529.95

$                    83.98

$                 445.97

$            9,733.67

41

$              529.95

$                    80.30

$                 449.65

$            9,284.02

42

$              529.95

$                    76.59

$                 453.36

$            8,830.66

43

$              529.95

$                    72.85

$                 457.10

$            8,373.57

44

$              529.95

$                    69.08

$                 460.87

$            7,912.70

45

$              529.95

$                    65.28

$                 464.67

$            7,448.03

46

$              529.95

$                    61.45

$                 468.50

$            6,979.53

47

$              529.95

$                    57.58

$                 472.37

$            6,507.16

48

$              529.95

$                    53.68

$                 476.27

$            6,030.89

49

$              529.95

$                    49.75

$                 480.20

$            5,550.70

50

$              529.95

$                    45.79

$                 484.16

$            5,066.54

51

$              529.95

$                    41.80

$                 488.15

$            4,578.39

52

$              529.95

$                    37.77

$                 492.18

$            4,086.21

53

$              529.95

$                    33.71

$                 496.24

$            3,589.97

54

$              529.95

$                    29.62

$                 500.33

$            3,089.64

55

$              529.95

$                    25.49

$                 504.46

$            2,585.18

56

$              529.95

$                    21.33

$                 508.62

$            2,076.55

57

$              529.95

$                    17.13

$                 512.82

$            1,563.74

58

$              529.95

$                    12.90

$                 517.05

$            1,046.69

59

$              529.95

$                      8.64

$                 521.31

$               525.37

60

$              529.95

$                      4.33

$                 525.62

$                  (0.24)

ekkarill92 answered 2 years ago
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