Todd purchases a new car for $22,650. He makes a $5000 down payment and finances the remainder through an amortized loan at an annual interest rate of 5.6%, compounded monthly for 6 years. The monthly payment is $289.19. Complete the first two lines of an amortization schedule for the situation. How is the balance on the first line on the amortization schedule found? O A. Subtract the amount of the down payment from the price of the car. O B. Subtract the amount of the monthly payment from the price of the car. O C. Add the amount of the monthly payment to the price of the car. O D. Add the amount of the down payment to the price of the car. Describe the procedure of completing a line of an amorization schedule. Choose the correct answer below. O A. Place the monthly payment under the pay hent column. To find the portion applied to interest, multiply the balance by the monthly interest rate. To find the portion applied to principal, subtract the portion applied to interest from the monthly payment. To find the new balance, subtract the portion applied to interest from the balance. B. Place the monthly payment under the payment column. To find the portion applied to interest, multiply the balance by the annual interest rate. To find the portion applied to principal, subtract the portion applied to interest from the monthly payment. To find the new balance, subtract the portion applied to principal from the balance. OC. Place the monthly payment under the payment column. To find the portion applied to interest, multiply the balance by the monthly interest rate. To find the portion applied to principal, subtract the portion applied to interest from the monthly payment. To find the new balance, subtract the portion applied to principal from the balance.
Todd purchases a new car for $22,650. He makes a $5000 down payment and finances the remainder through an amortized loan at an annual interest rate of 5.6%, compounded monthly for 6 years. The monthly payment is $289.19. Complete the first two lines of an amortization schedule for the situation. How is the balance on the first line on the amortization schedule found? O A. Subtract the amount of the down payment from the price of the car. O B. Subtract the amount of the monthly payment from the price of the car. O C. Add the amount of the monthly payment to the price of the car. O D. Add the amount of the down payment to the price of the car. Describe the procedure of completing a line of an amorization schedule. Choose the correct answer below. O A. Place the monthly payment under the pay hent column. To find the portion applied to interest, multiply the balance by the monthly interest rate. To find the portion applied to principal, subtract the portion applied to interest from the monthly payment. To find the new balance, subtract the portion applied to interest from the balance. B. Place the monthly payment under the payment column. To find the portion applied to interest, multiply the balance by the annual interest rate. To find the portion applied to principal, subtract the portion applied to interest from the monthly payment. To find the new balance, subtract the portion applied to principal from the balance. OC. Place the monthly payment under the payment column. To find the portion applied to interest, multiply the balance by the monthly interest rate. To find the portion applied to principal, subtract the portion applied to interest from the monthly payment. To find the new balance, subtract the portion applied to principal from the balance.
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 25PROB
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Question
(20) Please show how you got
a. the first cell of column 3
b. how you got the first cell of column 4
c. how you got the first cell of column 5
d. how you got the second cell of column 3
e. how you got the second cell of column 4
f. how you got the second cell of column 5
Transcribed Image Text:Todd purchases a new car for $22,650. He makes a $5000 down payment and finances the remainder through an
amortized loan at an annual interest rate of 5.6%, compounded monthly for 6 years. The monthly payment is $289.19.
Complete the first two lines of an amortization schedule for the situation.
How is the balance on the first line on the amortization schedule found?
O A. Subtract the amount of the down payment from the price of the car.
OB. Subtract the amount of the monthly payment from the price of the car.
O C. Add the amount of the monthly payment to the price of the car.
O D. Add the amount of the down payment to the price of the car.
Describe the procedure of completing a line of an amorization schedule. Choose the correct answer below.
O A. Place the monthly payment under the payment column. To find the portion applied to interest, multiply the
balance by the monthly interest rate. To find the portion applied to principal, subtract the portion applied to
interest from the monthly payment. To find the new balance, subtract the portion applied to interest from the
balance.
B. Place the monthly payment under the payment column. To find the portion applied to interest, multiply the
balance by the annual interest rate. To find the portion applied to principal, subtract the portion applied to
interest from the monthly payment. To find the new balance, subtract the portion applied to principal from the
balance.
OC. Place the monthly payment under the payment column. To find the portion applied to interest, multiply the
balance by the monthly interest rate. To find the portion applied to principal, subtract the portion applied to
interest from the monthly payment. To find the new balance, subtract the portion applied to principal from the
balance.
Complete the amortization schedule below.
Portion of payment
applied to interest
Portion of payment
applied to principal
$
$
$
$
$
(Type integers or decimals rounded to two decimal places as needed. Do not include the $ symbol in your answer.)
Balance
$
Payment
$
$
New balance
$
$
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