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FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sir please help urgently
You borrow money on a self liquidating
installment loan (equal payments at the end of
each year, each payment is part principal part
interest)
Loan amount $773,000
Interest Rate
14%
Life
41 years
Date of Loan
January 1, 2021
Use the installment method - not straight line
Do NOT round any interrmediate numbers.
Do NOT turn this into a monthly problem.
Do NOT put in minus signs, answer all positive
numbers.
Required:
1. What is the annual payment (round to the
nearest $)?
2. What are the total interest payments (round
to the nearest $)?
2$
3. After 17 payments have been made, what
percentage of the total interest has been paid
(round to the nearest percentage point)?
%
4. After 17 payments have been made, what
percentage of the total principal has been paid
(round to the nearest percentage point)?
%
Redo the problem if the interest rate is 3%
(for a well designed spreadsheet this should take
30 seconds)
Required:
5. What is the annual payment (round to the
nearest $)?
2$
6. What are the total interest payments (round
to the nearest $)?
$
7. After 17 payments have been made, what
percentage of the total interest has been paid
(round to the nearest percentage point)?
%
8. After 17 payments have been made, what
percentage of the total principal has been paid
(round to the nearest percentage point)?
Transcribed Image Text:You borrow money on a self liquidating installment loan (equal payments at the end of each year, each payment is part principal part interest) Loan amount $773,000 Interest Rate 14% Life 41 years Date of Loan January 1, 2021 Use the installment method - not straight line Do NOT round any interrmediate numbers. Do NOT turn this into a monthly problem. Do NOT put in minus signs, answer all positive numbers. Required: 1. What is the annual payment (round to the nearest $)? 2. What are the total interest payments (round to the nearest $)? 2$ 3. After 17 payments have been made, what percentage of the total interest has been paid (round to the nearest percentage point)? % 4. After 17 payments have been made, what percentage of the total principal has been paid (round to the nearest percentage point)? % Redo the problem if the interest rate is 3% (for a well designed spreadsheet this should take 30 seconds) Required: 5. What is the annual payment (round to the nearest $)? 2$ 6. What are the total interest payments (round to the nearest $)? $ 7. After 17 payments have been made, what percentage of the total interest has been paid (round to the nearest percentage point)? % 8. After 17 payments have been made, what percentage of the total principal has been paid (round to the nearest percentage point)?
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