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On January 1, Vixen, Inc. purchased a new sleigh packing machine, costing $62,500, by signing a...

On January 1, Vixen, Inc. purchased a new sleigh packing machine, costing $62,500, by signing a promissory note with 7-year, 4.75% terms with biannual payments. Show the entire amortization schedule and highlight the total, interest and principal payment for payment number 13. Also, specify what year/month this payment occurs.

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Expert Solution

Payments are done biannual, therefore interest rate for a period (semi- annual)

= 4.75/2 = 2.375%

Total Installment = 7 x 2 = 14

Discounting Factor @ 2.375%

1 0.9768
2 0.9541
3 0.9320
4 0.9104
5 0.8893
6 0.8686
7 0.8485
8 0.8288
9 0.8096
10 0.7908
11 0.7724
12 0.7545
13 0.7370
14 0.7199
PVAF 11.7928

Amount of each installment = 62500/ PVAF

= 62500 / 11.7928 = $ 5300

Amortization Schedule:

Year Date Principal Amount Interest @ 2.375% Payment Closing Balance
Year 1 31st June 62500 1484 5300 58685
31st Dec 58685 1394 5300 54778
Year 2 31st June 54778 1301 5300 50780
31st Dec 50780 1206 5300 46686
Year 3 31st June 46686 1109 5300 42495
31st Dec 42495 1009 5300 38204
Year 4 31st June 38204 907 5300 33812
31st Dec 33812 803 5300 29315
Year 5 31st June 29315 696 5300 24711
31st Dec 24711 587 5300 19998
Year 6 31st June 19998 475 5300 15173
31st Dec 15173 360 5300 10234
Year 7 31st June 10234 243 5300 5177
31st Dec 5177 123 5300 0
Total Interest 11698

ekkarill92 answered 1 year ago
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