A loan of 879,000 is to be repaid in 30 years by month-end repayments starting in one month. The interest rate is 5.6% p.a. compounded monthly. Calculate the interest paid in Year 5.
A loan of 879,000 is to be repaid in 30 years by month-end repayments starting in one month. The interest rate is 5.6% p.a. compounded monthly. Calculate the interest paid in Year 5.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Give typing answer with explanation and conclusion
A loan of 879,000 is to be repaid in 30 years by month-end repayments starting in one month. The interest rate is 5.6% p.a. compounded monthly. Calculate the interest paid in Year 5. (between the end of month 48 and the end of month 60). Correct your answer to the nearest cent without any units. (Do not use "$" or "," in your answer. e.g. 12345.67) (Hint: you can use Excel to find the answer.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step 1: Given information:
VIEWStep 2: Calculate the monthly payment as follows:
VIEWStep 3: Calculate the loan remaining balance after 4 years as follows:
VIEWStep 4: Calculate the loan remaining balance after 5 years as follows:
VIEWStep 5: Calculate the reduction in principal amount as follows:
VIEWStep 6: Calculate the total monthly payments in year 5 as follows:
VIEWStep 7: Calculate the interest paid for year 5 as follows:
VIEWSolution
VIEWStep by step
Solved in 8 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education