A small industrial contractor purchased a warehouse building for storing equipment and materials that are not immediately needed at construction job sites. The cost of the building was $100,000 and the contractor made an agreement with the seller to finance the purchase over a 5-year period. The agreement stated that monthly payments stated that monthly payments would be made based on a 30-year amortization, but the balance owed at the end of year 5 would be paid in a lump-sum balloon payment. What was the size of the balloon payment if the interest rate on the loan was 6% per year, compounded monthly?
A small industrial contractor purchased a warehouse building for storing equipment and materials that are not immediately needed at construction job sites. The cost of the building was $100,000 and the contractor made an agreement with the seller to finance the purchase over a 5-year period. The agreement stated that monthly payments stated that monthly payments would be made based on a 30-year amortization, but the balance owed at the end of year 5 would be paid in a lump-sum balloon payment. What was the size of the balloon payment if the interest rate on the loan was 6% per year, compounded monthly?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....
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