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algol13
3 years ago
8

A fifteen-year adjustable-rate mortgage of $117,134.80 is being repaid with monthly payments of $988.45 based upon a nominal int

erest rate of 6% convertible monthly. Immediately after the 60th payment, the interest rate is increased to a nominal interest rate of 7.5% convertible monthly. The monthly payments remain at $988.45, and there will be an additional balloon payment at the end of the fifteen years to pay the outstanding loan balance. (a) Calculate the loan balance immediately after the 84th payment. (b) Calculate the amount of interest in the 84th payment. (c) Calculate the amount of the balloon payment.
Business
1 answer:
Sedbober [7]3 years ago
3 0

Answer:

Using an excel spreadsheet I prepared an amortization schedule. For the 61st payment, the interest rate is increased from 0.5% to 0.625% monthly.

(a) Calculate the loan balance immediately after the 84th payment.

  • $77,884.78

(b) Calculate the amount of interest in the 84th payment.

  • $489.90

(c) Calculate the amount of the balloon payment.

  • $12,168.43

As you can see, the interest amount for the 61st payment increases, while it had been decreasing previously.

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On January 1, 2020, Cougar Sales, Inc. issued $15,000 in bonds for $14,700. They were 6-year bonds with a stated rate of 9%, and
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Answer:

$700

Explanation:

If a bond is issued at a lower price than the face value of the bond, then the bond is issued on the discount. This discount is amortized over the bond's life. This amortization will be expensed as Interest Expense.

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