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Amortization. loan consolidated incorporated ( LCI) is offered a special one- time package to reduce custom...

Amortization. loan consolidated incorporated ( LCI) is offered 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 Bill's $246,000 fir custom Autoa if custom Autos will make an annual payment to LCI at an interest rate of 8% 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?

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Answer #1

a) Annual Payment = $61,612.29 ( pls ignore the currency in the chart)

b) Amortization schedule is as above

c) As the Oustanding principal at the start of 3rd year is $158780, hence half of the principal will be paid of in the 3rd year around mid of the year

d) Total Interest is sum of column C= $62061.44

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