Question

Problem 15-4A (Part Level Submission) Talkington Electronics issues a $420,500, 4%, 15-year mortgage note on December 31, 2016. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for annual installment payments, exclusive of real estate taxes and insurance, of $51,844. Payments are due on December 31. (a) Your answer is partially correct. Try again. Prepare an installment payments schedule for the first 4 years. (Round answers to o decimal places, e.g. 15,250.) Annual Interest Period Cash Payment Interest Expense Reduction of Principal Principal Balance Issue Date 420500 420500 16820 21000 399500 399500 15980 21840 377660 377660 15106 22714 354946 354946 14198 23622 331324 Attempts: 1 of 3 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

Solution

Annual Interest period	Cash Payment	Interest expense	Reduction in principal	Principal Balance
Issue date				$      420,500
1	$        51,844	$        16,820	$        35,024*	$      385,476**
2	$        51,844	$        15,419	$        36,425	$      349,051
3	$        51,844	$        13,962	$        37,882	$      311,169
4	$        51,844	$        12,447	$        39,397	$      271,772

*51844-16820

**420500-35024

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