0. Read examples 6 and 7 in the text
1. Write an instruction describing amortization tables in your words. Tell what information in the columns, how the information in the three main column is calculated, and why it is useful, Do not use specific numbers, mathematical symbols, or excel functions, or cell references, Be sure to explain the calculations for the three columns.
2. Find the median home price for a city where you would like to live. Tell how you found it. Give a website if appropriate. Then, tell what the city is, why you would like to live there, and what the median home price is in two to five complete English sentences.
3. You will probably have to make a down payment of 20% for your dream house. Since this is a hypothetical situation, assume your instructor will give you the money for the down payment if you don't have it, so your loan will be for 80% of the median price. State this amount clearly and explain how you got it.
1 | Mortgage interest payment =(Beginning of the year Loan Balance )*Interest Rate | |||||||||
Balance of the Annual payment is accounted as payment of principal | ||||||||||
Hence, the Beginning Balance in the next period gets reduced by the principal amount | ||||||||||
accounted for in the earlier period | ||||||||||
Thus every subsequent year, the interest payment reduces . | ||||||||||
Since annualpayment is contant, Principal payment in every subsequent year increases | ||||||||||
PREPARATION OF AMORTIZATION SCHEDULE: | ||||||||||
STEP 1 | ||||||||||
Calculate constant payment per period based on mortgage amount, number of payments and interest rate | ||||||||||
STEP 2 | ||||||||||
Create Mortgage schedule with the following formula: | ||||||||||
Interest payment =Beginning Loan balance*(Interest rate per period) | ||||||||||
Principal payment =(Constant Payment per period)-(Interest payment for the period) | ||||||||||
Ending Loan Balance of a Period =(Beginning Balance)-(Principal payment of the period) | ||||||||||
Beginning Loan balance of a period=Ending Loan Balance of previous period | ||||||||||
In this cae | ||||||||||
Pv | Mortgage Loan amount | $90,000 | ||||||||
Interest payment in month 1=90000*Interest rate | $600.00 | |||||||||
Rate | Monthly interest rate=600/90000= | 0.0066666667 | ||||||||
Annual interest rate=0.006667*12= | 0.08 | 8% | ||||||||
Nper | Number of payments | 360 | (30*12) | |||||||
Monthly constant payment | $660.39 | (Using PMT function of excel with Rate=0.00666667,Nper=360,Pv=-90000) | ||||||||
Excel Command: PMT(0.00666667,360,-90000) | ||||||||||
MORTGAGE SCHEDULE | ||||||||||
A | B | C=A*0.006666667 | D=B-C | E=A-D | ||||||
Month | Beginning Balance | Total Payment | Interest | Principal | Ending Balance | |||||
0 | $90,000 | |||||||||
1 | $90,000.00 | $660.39 | $600.00 | $60.39 | $89,939.61 | |||||
2 | $89,939.61 | $660.39 | $599.60 | $60.79 | $89,878.82 | |||||
3 | $89,878.82 | $660.39 | $599.19 | $61.20 | $89,817.62 | |||||
4 | $89,817.62 | $660.39 | $598.78 | $61.60 | $89,756.02 | |||||
5 | $89,756.02 | $660.39 | $598.37 | $62.01 | $89,694.01 | |||||
6 | $89,694.01 | $660.39 | $597.96 | $62.43 | $89,631.58 | |||||
7 | $89,631.58 | $660.39 | $597.54 | $62.84 | $89,568.73 | |||||
8 | $89,568.73 | $660.39 | $597.12 | $63.26 | $89,505.47 | |||||
9 | $89,505.47 | $660.39 | $596.70 | $63.69 | $89,441.78 | |||||
10 | $89,441.78 | $660.39 | $596.28 | $64.11 | $89,377.67 | |||||
11 | $89,377.67 | $660.39 | $595.85 | $64.54 | $89,313.14 | |||||
12 | $89,313.14 | $660.39 | $595.42 | $64.97 | $89,248.17 | |||||
0. Read examples 6 and 7 in the text 1. Write an instruction describing amortization tables in your words. Tell what information in the columns, how the information in the three main column is calcul...
1. Complete the following table. Number of Annual Payments or Years Present Value Interest Rate Future Value Annuity 10 $250.00 12% 20 S1,000 25 S500,000 30 S1,000,000 2. You just started working and you planned to save $5,000 every year in your retirement account. How much money will you have in your retirement account once you retire in 40 years? Your retirement account pays 4% interest rate per year. 3. You just retired with S1,000,000 savings. You'd like to receive...
Time Value of Money Spreadsheet Example 4 Module IV Name: Date: 6 7 8 Question 1 9 Question 2 10 Question 3 11 Question 4 12 Question 5 13 Question 6 14 Question 7 15 Question 8 16 Question 9 17 Question 10 18 19 20 Single Amount or Annuity 21 Periodic Interest Rate 22 Number of Periods 23 24 25 Present Value of Single Amount 26 27 Future Value of Single Amount 28 29 Future Value of An Annuity...
Fleda's Beauty Company has $200,000 of total assets and earns 20 percent interest and taxes on these assets. The ratio of total debts to total assets (or DR been set at 50 percent. The interest rate on short-term debt is 7 percent, while the interest rate on long-term debt is 10 percent. A conservative policy calls for only long-term debt with no short-term debt; an intermediate policy calls for 50 percent short-term debt and 50 percent long-term debt; and an...
Case Questions 1. What are the cash flows associated with each of Adam's three car financing options? 2. Suppose that, similar to his parents, Adam had plenty of cash in the bank so that he could easily afford to pay cash for the car without running into debt now or in the foreseeable future. If his cash earns interest at a 5.4% APR (based on monthly compounding) at the bank, what would be his best purchase option for the car? 3. In fact,...
Payable: Use the t-accts below to record the following entries. If you get stuck, carefully review the online and text examples. On September 1t, Geo Inc. borrows $2,400 from State Bank and signs a 10 month short-term note payable. The interest rate on the note is 7%. Even though the note is only for 10 months, the interest rate is an annual rate (see interest calculations below). a) Record the entry to borrow the money from the bank. b) Next,...
MULTIPLE CHOICE 1) Which of the following is NOT an investment as defined in the text? A) a certificate of deposit issued by a bank B) a new automobile C) a United States Saving Bond D) a mutual fund held in a retirement account 2) Which of the following is NOT traded in the securities markets? A) stocks B) bonds C) derivatives D) real estate 3) The governmental agency that oversees the capital markets is the A) Federal Trade Commission....
ARE MY ANSWERS CORRECT? 25 questions 1. what an A/R aging analysis is, its purpose, and how it is created. Used to estimate amount needed in Allowance for Bad Debts Account (a contra account) A/R Days Outstanding 0-30 31-60 61-90 Over 90 Under each term list all A/Rs that are not paid by date Use historical experience to estimate the percentage of A/R for each date period to determine allowance for Bad Debts What the three major cost components are...
Can someone please tell me what chapters (1-5) these questions are based on? I have already answered the questions and understand how to solve the material, but i want to be able to pinpoint where i can find this info. in the book. I am using Brigham’s Fundamentals of Financial Management (pictures attached). If it is hard to read, please let me know. i will post better pictures. i know the time vale of money stuff already EDIT: HERE IS...
1. When it comes to financial matters, the views of Aristotle can be stated as: a. usury is nature’s way of helping each other. b. the fact that money is barren makes it the ideal medium of exchange. c. charging interest is immoral because money is not productive. d. when you lend money, it grows more money. e. interest is too high if it can’t be paid back. 2. Since 2008, when the monetary base was about $800 billion,...
How does this article relate to the factors of productions in economics? From Music to Maps, How Apple’s iPhone Changed Business Ten years ago, hailing a cab meant waiving one's arm at passing traffic, consumers routinely purchased cameras, and a phone was something people made calls on. The iPhone, released a decade ago this month, changed all of that and more, sparking a business transformation as sweeping as the one triggered by the personal computer in the 1980s. Apple Inc.'s...