Jan sold her house on December 31 and took a $25,000 mortgage as part of the payment. The 10-year mortgage has a 8% nominal interest rate, but it calls for semiannual payments beginning next June 30. Next year Jan must report on Schedule B of her IRS Form 1040 the amount of interest that was included in the two payments she received during the year.
a. What is the dollar amount of each payment Jan receives? Round your answer to the nearest cent. $
b. How much interest was included in the first payment? Round your answer to the nearest cent. $
How much repayment of principal was included? Round your answer to the nearest cent. $
How do these values change for the second payment? The portion of the payment that is applied to interest declines, while the portion of the payment that is applied to principal increases. The portion of the payment that is applied to interest increases, while the portion of the payment that is applied to principal decreases. The portion of the payment that is applied to interest and the portion of the payment that is applied to principal remains the same throughout the life of the loan. The portion of the payment that is applied to interest declines, while the portion of the payment that is applied to principal also declines. The portion of the payment that is applied to interest increases, while the portion of the payment that is applied to principal also increases.
c. How much interest must Jan report on Schedule B for the first year? Round your answer to the nearest cent. $
Will her interest income be the same next year?
d. If the payments are constant, why does the amount of interest income change over time?
A.As the loan is amortized (paid off), the beginning balance, hence the interest charge, increases and the repayment of principal increases.
B.As the loan is amortized (paid off), the beginning balance, hence the interest charge, declines and the repayment of principal increases.
C. As the loan is amortized (paid off), the beginning balance, hence the interest charge, declines and the repayment of principal declines.
D.As the loan is amortized (paid off), the beginning balance, hence the interest charge, increases and the repayment of principal declines.
E. As the loan is amortized (paid off), the beginning balance declines, but the interest charge and the repayment of principal remain the same.
Jan sold her house on December 31 and took a $25,000 mortgage as part of the...
Jan sold her house on December 31 and took a $25,000 mortgage as part of the payment. The 10-year mortgage has a 7% nominal interest rate but it calls for semiannual payments beginning next June 30. Next year Jan must report on Schedule B of her IRS Form 1040 the amount of interest that was included in the two payments she received during the year a. What is the dollar amount of each payment Jan receives? Round your answer to...
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Jan sold her house on December 31 and took a SS 000 mortgage as part of the payment. Thc 10-year mortgage has a 10% nominal interest rate but it cals for semiannual payments beginnng next June 30. Ne t year Jan must report on Schedule B of her IRS Form 1040 the amount of interest that was induded in the two payments she received during the year s. What is the dollar amount of each payment Jan receives Round your...
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Loan amortization Jan sold her house on December 31 and took a $10,000 mortgage as part of the payment. The 10-year mortgage has a 10% nominal interest rate, but it calls for semiannual payments beginning next June 30. Next year Jan must report on Schedule B of her IRS Form 1040 the amount of interest that was included in the two payments she received during the year. a. What is the dollar amount of each payment Jan receives? Round your...
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An amortization table reports the amount of interest and principal contained within each regularly scheduled payment used to repay an amortized loan. Example Amortization Schedule Payment Interest Repayment of Principal Year Beginning Amount Ending Balance 1 2 3 Consider the amount of the interest payments included in each of the payments of an amortized loan. Which of the following statements regarding the pattern of the interest payments is true? The portion of the payment going toward interest is smaller in...
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Question 4 of 5 A $85,000 loan was amortized over 14 years at 4.00 % compounded annually. Payments were made at the end of every month to clear the loan. a. What is the size of the payments at the end of every month? $0.00 Round to the nearest cent b. What was the balance at the end of 4 years? $0.00 Round to the nearest cent c.What was the interest portion of payment 84? $0.00 Round to the nearest...