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In: Finance
Claire repays a loan to banker Maggie by amortization method at 6% effective. She makes 25...
Claire repays a loan to banker Maggie by amortization method at 6% effective. She makes 25 equal payments of $1000 at the end of each year. If the amount of interest in each payment is invested by Maggie at 6% effective as she receives the payments. What is the accumulated amount of the reinvested interest at the end of the 25th year?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Sue takes out a 3-year loan that she repays using the amortization method. She makes monthly...
Sue takes out a 3-year loan that she repays using the
amortization method. She makes monthly payments at a nominal annual
interest rate of 4.8% compounded monthly. The first payment is $50
and is to be paid one month from the date of the loan. Each
succeeding monthly payment will be 2% larger than the prior
payment. Sue's outstanding loan balance after the 25 th payment
is
Bob borrows 540,000 at annual effective interest rate 3%. She repays this loan by paying off...
Bob borrows 540,000 at annual effective interest rate 3%. She
repays this loan by paying off only the interest due at the end of
each year to the lender and depositing a level amount Q at the end
of each year into a sinking fund account paying 6% APY. The goal is
to accumulate the full balance of the loan amount in the sinking
fund at the end of 10 years.
a. Find the level sinking fund deposit.
b. What...
what is the effective-interest amortization method?
Question: In regard to a bond discount or premium, what is the effective-interest amortization
method?
Using the effective-interest amortization method On December 31, 2018, when the market interest rate is 6%,...
Using the effective-interest amortization method
On December 31, 2018, when the market interest rate is 6%,
Benson Realty issues $700,000 of 6.25%, 10-year bonds payable. The
bonds pay interest semiannually. Ben- son Realty received $713,234
in cash at issuance.
Requirements
1. Prepare an amortization table using the effective interest
amortization method for the first two semiannual interest periods.
(Round to the nearest dollar.)
2. Using the amortization table prepared in Requirement 1,
journalize issuance of the bonds and the first...
A loan is being repaid by the amortization method with an installment at the end of...
A loan is being repaid by the amortization method with an
installment at the end of each 80 quarters at 6% annual effective
interest, the first payment one quarter after the loan is made. In
which payment are the principal and the interest most nearly equal
to each other?
ANS: 33 Please show the steps.
Common information for 6 and 7 Andrew borrows 360,000 at i=.05. He repays this loan by...
Common information for 6 and 7
Andrew borrows 360,000 at i=.05. He repays this loan by paying
off only the interest due at the end of each year to the lender and
depositing a level amount Y at the end of each year into a sinking
fund account offering 8% APY so as to accumulate the full balance
of the loan amount in the sinking fund at the end of 20 years.
What value Y must he deposit into the...
Question: In regard to a bond discount or premium, what is the effective-interest amortization method?
Question: In regard to a bond discount or premium, what is the effective-interest amortization
method?
Effective Interest Amortization of Premiums and Discounts The appropriate method of amortizing a premium or discount...
Effective Interest Amortization of Premiums and Discounts
The appropriate method of amortizing a premium or discount on
issuance of bonds is the effective interest method.
Required:
What is the effective interest method of amortization, and how
is it different from or similar to the straightâline method of
amortization?
How are interest and the amount of discount or premium
amortization computed using the effective interest method, and why
and how do amounts obtained using the effective interest method
differ from amounts...
Loan Amount: $10,000,000.00 Interest Rate: 6-3/4% Amortization:  
Loan
Amount:
$10,000,000.00
Interest
Rate:
6-3/4%
Amortization:
30 years
Term:
10 years
A homeowner obtains a $500,000.00 loan at an interest rate of
6-1/8% based on a 30 year amortization schedule.
What is the monthly payment?
What is the total amount of interest that would be paid over
the life of the loan?
Assume that after the 48th payment, the homeowner
pays an additional $200.00 per month. At what month would the loan
be paid in full?
How many years...
Loan Amount: $20,000,000.00 Interest Rate: 6-3/4% Amortization:  
Loan
Amount:
$20,000,000.00
Interest
Rate:
6-3/4%
Amortization:
30 years
Term:
10 years
Assume the above loan is interest only for the first three (3)
years.
What is the Annual Debt Service (ADS) in the first year?
How much interest (cumulative) will have been paid at the end
of year 3?
How much principal will be due at maturity?
How much interest will have been paid over the 10 year
term?
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