Question

Amortization. Loan Consolidated Incorporated is offering a special one-time package to reduce Custom Autos Outstanding bills to one easy-to-handle payment plan. LCI will pay off the current outstanding bills of $246,000 for Custom Autos if Custom Autos will make an annual payment to LCI at an interest rate of %12 over the next 5 years.

PLEASE ANSWER THE QUESTIONS a-d BELOW

14 of 16 (13 complete Score: 0 of 1 pt P4-22 (similar to) Amortization. Loan Consolidated Incorporated (LCI) is offering a special one-time package to reduce Custom Autos' outstanding bills to one Autos will make an annual payment to LCI at an interest rae of 12% over the next 5 years a. What are the annual payments of the loan? b. What is the amortization schedule for this loan if Custom Autos wants to pay off the loan before the loan maturity in 5 years? c. When will the balance be half paid off? d. What is the total interest expense on the loan over the 5 years? a. What is the annual payment of the loan? S (Round to the nearest cent) Enter your answer in the answer box and then click Check Answer. 17 remaining

Answer 1

I am showing below two snapshots of my model. The first one contain answers and the second one contains the formula. All the parts have been answered sequentially.

А 97 Loan, PV (246,000.00) 98 Interest rate 12% 99 Term 100 Part (a) Annual Payment $68,242.79 101 102 Part (b) Amortization Schedule 103 Year Payment Interest Principal repaid 104 68,242.79 29,520.00 106 2 68,242.79 24,873.26 107 68,242.79 19,668.92 68,242.79 13,840.06 68,242.79 7,311.73 110 Total 341,213.97 95,213.97 111 Part (C) 112 Half the loan amount 123000 113 Half the amount is paid off at the end of three years. 38,722.79 43,369.53 48,573.87 54,402.74 60,931.07 246,000.00 Principal outstanding 246,000.00 207,277.21 163,907.68 115,333.80 60,931.07 (0.00) 109 114 115 Part (d) 116 Total interest expense 95,213.97

Screenshot in formula mode:

-246000 0.12 97 Loan, PV 98 Interest rate 99 Term 100 Part(a) Annual Payment 101 102 Part (b) Amortization Schedule -PMT(898,899,897,0) Payment Interest Principal repaid Principal outstanding =-897 103 Year 1040 105 1 106 2 1073 1084 109 5 110 Total 111 Part (C) 112 Half the loan amount 113 Half the amount is paid off at the end of three ye =$B$100 =$B$100 =$B$100 =$B$100 =$B$100 =SUM(B105:B109) =E104*$B$98 =E105*$B$98 =E106*$B$98 =E107*$B$98 =E108*$B$98 =SUM(C105:C109) =B105-C105 =B106-C106 =B107-C107 =B108-C108 =B109-C109 -SUM(D105:0109) =E104-D105 -E105-D106 =E106-D107 =E107-D108 =E108-D109 =-B97/2 114 115 Part (d) 116 Total Interest expense =C110