Question 1

The interest rate on a $50,000 loan is 7.6% compounded semi-annually. Quarterly payments will pay off the loan in ten years.
a) Calculate the interest component of Payment 8.
b) Calculate the principal component of Payment 33.
c) Calculate the total interest in Payments 21 to 30 inclusive.
d) Calculate the reduction of principal in Year 3.

Accepted Answer

a) $822.74; b) $1,542.15; c) $4,474.70; d) $4,055.64

Question 2

Golden Dragon Restaurant obtained a $9,000 loan at 5% compounded annually to replace some kitchen equipment. Prepare a complete amortization schedule if payments of $1,800 (except for a smaller final payment) are made semi-annually.

Accepted Answer

(See the Instructor's Manual for the schedule)

Question 3

Golden Dragon Restaurant obtained a $9,000 loan at 5% compounded annually to replace some kitchen equipment. Prepare a complete amortization schedule if the loan is to be repaid by semi-annual payments over a three-year term. Calculate the total interest charges.

Accepted Answer

$793.68 (See the Instructor's Manual for the schedule)

Question 4

Valley Produce received $50,000 in vendor financing at 3.8% compounded semi-annually for the purchase of harvesting machinery. The contract requires equal annual payments for seven years to repay the debt. Construct the amortization schedule for the debt. How much interest will be paid over the seven-year term?

Accepted Answer

The answer of Valley Produce received $50,000 in vendor financing...

Question 5

Dr. Alvano borrowed $8,000 at 8% compounded quarterly to purchase a new X-Ray machine for his clinic. The agreement requires quarterly payments during a two-year amortization period. Suppose that the loan permits an additional prepayment of principal on any scheduled payment date. Prepare an amortization schedule that reflects a prepayment of $1,000 with the third scheduled payment.

Accepted Answer

The answer of Dr. Alvano borrowed $8,000 at 8% compounded...

Question 6

The interest rate on a $14,000 loan is 5.4% compounded semi-annually. Semi-annual payments will pay off the loan in seven years.
a) Calculate the interest component of Payment 10.
b) Calculate the principal component of Payment 3.
c) Calculate the interest paid in Year 6.
d) How much do Payments 3 to 6 inclusive reduce the principal balance?

Accepted Answer

The answer of The interest rate on a $14,000 loan...

Question 7

A five-year loan of $25,000 at 7.2% compounded quarterly requires quarterly payments.
a) Calculate the interest component of Payment 10.
b) Calculate the principal component of Payment 13.
c) Calculate the total interest in Payments 5 to 10 inclusive.
d) Calculate the principal paid in Year 4.

Accepted Answer

The answer of A five-year loan of $25,000 at 7.2%...

Question 8

Dr. Alvano borrowed $8,000 at 8% compounded quarterly to purchase a new X-ray machine for his clinic. The agreement requires quarterly payments of $1,000 (except for a smaller final payment). Prepare the full amortization schedule for the loan. Calculate the total interest charges.

Accepted Answer

The answer of Dr. Alvano borrowed $8,000 at 8% compounded...

Question 9

Valley Produce received $50,000 in vendor financing at 3.8% compounded semi-annually for the purchase of harvesting machinery. The contract requires annual payments of $10,000 (except for a smaller final payment). Construct the complete amortization schedule for the debt. How much interest will be paid over the entire life of the loan?

Accepted Answer

The answer of Valley Produce received $50,000 in vendor financing...

Question 10

Dr. Alvano borrowed $8,000 at 10% compounded quarterly to purchase a new X-ray machine for his clinic. The agreement requires quarterly payments during a two-year amortization period. Prepare the full amortization schedule for the loan. Calculate the total interest charges.

Accepted Answer

The answer of Dr. Alvano borrowed $8,000 at 10% compounded...

Question 11

Cloverdale Nurseries obtained a $60,000 loan at 7.5% compounded monthly to build an additional greenhouse. Construct a partial amortization schedule for payments of $1,000 per month (except for a smaller final payment) showing details of the first two payments, Payments 56 and 57, and the last two payments.

Accepted Answer

The answer of Cloverdale Nurseries obtained a $60,000 loan at...

Question 12

Cloverdale Nurseries obtained a $60,000 loan at 7.5% compounded monthly to build an additional greenhouse. Monthly payments were calculated to amortize the loan over six years. Construct a partial amortization schedule showing details of the first two payments, Payments 43 and 44, and the last two payments.

Accepted Answer

The answer of Cloverdale Nurseries obtained a $60,000 loan at...

Question 13

A $125,000 loan at 6.0% compounded semi-annually will be repaid by monthly payments over a 20-year amortization period.
a) Calculate the interest component of Payment 188.
b) Calculate the principal component of Payment 101.
c) Calculate the reduction of principal in Year 1.
d) Calculate the reduction of principal in Year 20.

Accepted Answer

The answer of A $125,000 loan at 6.0% compounded semi-annually...

Question 14

Jean and Walter Pereira financed the addition of a swimming pool using a $24,000 home improvement loan from their bank. Monthly payments were based on an interest rate of 5.2% compounded semi-annually and a five-year amortization. Construct a partial amortization schedule showing details of the first two payments, Payments 30 and 31, and the last two payments. What total interest will the Pereiras pay over the life of the loan?

Accepted Answer

The answer of Jean and Walter Pereira financed the addition...

Question 15

A $40,000 loan at 6.6% compounded monthly will be repaid by monthly payments over ten years.
a) Calculate the interest component of Payment 35.
b) Calculate the principal component of Payment 63.
c) Calculate the reduction of principal in Year 1.
d) Calculate the reduction of principal in Year 10.

Accepted Answer

The answer of A $40,000 loan at 6.6% compounded monthly...

Question 16

Monica bought a $1,250 laptop computer for 20% down, with the balance to be paid with interest at 15% compounded monthly in six equal monthly payments. Construct the full amortization schedule for the debt. Calculate the total interest paid.

Accepted Answer

The answer of Monica bought a $1,250 laptop computer for...

Question 17

Jean and Walter Pereira financed the addition of a swimming pool using a $24,000 home improvement loan from their bank. Monthly payments of $500 (except for a smaller final payment) include interest at 5.2% compounded semi-annually. Construct a partial amortization schedule showing details of the first two payments, Payments 28 and 29, and the last two payments. What total interest will the Pereiras pay over the life of the loan?

Accepted Answer

The answer of Jean and Walter Pereira financed the addition...

Question 18

The monthly payments on a $15,000 loan at 6.0% compounded monthly are $275.
a) Calculate the interest component of Payment 13.
b) Calculate the principal component of Payment 44.
c) Calculate the final payment.

Accepted Answer

The answer of The monthly payments on a $15,000 loan...

Question 19

Monica bought a $1250 laptop computer for 20% down and payments of $200 per month (except for a smaller final payment) including interest at 15% compounded monthly. Construct the full amortization schedule for the debt. Calculate the total interest paid.

Accepted Answer

The answer of Monica bought a $1250 laptop computer for...

Question 20

Cloverdale Nurseries obtained a $60,000 loan at 7.5% compounded monthly to build an additional greenhouse. Monthly payments were calculated to amortize the loan over six years. Construct a partial amortization schedule showing details of the first two payments, Payments 43 and 44, and the last two payments.

Accepted Answer

The answer of Cloverdale Nurseries obtained a $60,000 loan at...

Quiz 13: Loan Amortization; Mortgages

Golden Dragon Restaurant obtained a $9,000 loan at 5% compounded annually to replace some kitchen equipment. Prepare a complete amortization schedule if payments of $1,800 (except for a smaller final payment) are made semi-annually.

Golden Dragon Restaurant obtained a $9,000 loan at 5% compounded annually to replace some kitchen equipment. Prepare a complete amortization schedule if the loan is to be repaid by semi-annual payments over a three-year term. Calculate the total interest charges.

A five-year loan of $25,000 at 7.2% compounded quarterly requires quarterly payments. a) Calculate the interest component of Payment 10. b) Calculate the principal component of Payment 13. c) Calculate the total interest in Payments 5 to 10 inclusive. d) Calculate the principal paid in Year 4.

Dr. Alvano borrowed $8,000 at 8% compounded quarterly to purchase a new X-ray machine for his clinic. The agreement requires quarterly payments of $1,000 (except for a smaller final payment). Prepare the full amortization schedule for the loan. Calculate the total interest charges.

Dr. Alvano borrowed $8,000 at 10% compounded quarterly to purchase a new X-ray machine for his clinic. The agreement requires quarterly payments during a two-year amortization period. Prepare the full amortization schedule for the loan. Calculate the total interest charges.

A $40,000 loan at 6.6% compounded monthly will be repaid by monthly payments over ten years. a) Calculate the interest component of Payment 35. b) Calculate the principal component of Payment 63. c) Calculate the reduction of principal in Year 1. d) Calculate the reduction of principal in Year 10.

Monica bought a $1,250 laptop computer for 20% down, with the balance to be paid with interest at 15% compounded monthly in six equal monthly payments. Construct the full amortization schedule for the debt. Calculate the total interest paid.

The monthly payments on a $15,000 loan at 6.0% compounded monthly are $275. a) Calculate the interest component of Payment 13. b) Calculate the principal component of Payment 44. c) Calculate the final payment.

Monica bought a $1250 laptop computer for 20% down and payments of $200 per month (except for a smaller final payment) including interest at 15% compounded monthly. Construct the full amortization schedule for the debt. Calculate the total interest paid.