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navik [9.2K]
3 years ago
8

"5. you are buying a property that will carry a $1,750,000 mortgage. your loan is interest only for 5 years but the interest rat

e can reset every year. the interest rate has a cap of 0.75% per year. the starting rate is 4.00%. at the end of year 1, the loan resets with an actual rate is 5.50%. (hint: remember the cap). at the end of year 2, the actual loan rate climbs to 7.0%. the rate remains there. in year 6, the loan resets to a fully amortized loan with 25 years to maturity at the current rate plus 0.25%. put together a loan schedule that shows the annual payments and balance at the end of each year. what is the fully amortized payment beginning in year 6?"
Business
1 answer:
dsp733 years ago
5 0
I honesly dont know frfr
You might be interested in
Pretzelmania, Inc., issues 7%, 10-year bonds with a face amount of $70,000 for $70,000 on January 1, 2021. The market interest r
AlexFokin [52]

Answer:

Pretzelmania, Inc.

1. Records:

Debit Cash $70,000

Credit Bonds Liability $70,000

To record the issuance of 7% bonds at face value.

June 30:

Interest Expense $2,450

Cash payment for interest $2,450

To record the first interest expense and payment.

(No amortization of discounts or premiums)

December 31: (not required but showed for emphasis)

Debit Interest Expense $2,450

Credit Cash payment for interest $2,450

To record the second interest expense and payment.

(No amortization of discounts or premiums)

2. Records:

Debit Cash $63,948

Bonds Discounts $6,052

Bonds Liability $70,000

To record the issuance of 7% bonds at discounts.

June 20, 2015:

Debit Interest Expense $2,557.92

Credit Amortization of bonds discounts $107.92

Credit Cash payment for interest $2,450

To record the first interest expense and payment, including amortization of bonds discounts.

December 31, 2015: (not required but showed for emphasis)

Debit Interest Expense $2,562.24

Credit Amortization of bonds discounts $112.24

Credit Cash payment for interest $2,450

To record the second interest expense and payment, including amortization of bonds discounts.

3. Records:

Debit Cash $76,860

Credit Bonds Liability $70,000

Credit Bonds Premium $6,860

To record the issuance of 7% bonds at premium.

June 30, 2015:

Debit Interest Expense $2,305.80

Debit Amortization of bonds premium $144.20

Credit Cash payment for interest $2,450

To record the first interest expense and payment, including amortization of bonds premium.

December 31, 2015: (not required but showed for emphasis)

Debit Interest Expense $2,301.50

Debit Amortization of Bonds Premium $148.50

Credit Cash payment for interest $2,450

To record the second interest expense and payment, including amortization of bonds premium.

Explanation:

1.  issues 7%, 10-year bonds with a face amount of $70,000 for $70,000 on January 1, 2021. The market interest rate for bonds of similar risk and maturity is 7%. Interest is paid semiannually on June 30 and December 31.

a) Data and Calculations:

Face value of bonds = $70,000

Issuance value = $70,000

Interest rate on bonds = 7%

Market interest rate = 7%

Period of bonds = 10 years

Payment period = semiannually

Issue date = January 1, 2021

June 30:

Semiannual interest rate = 3.5% (7%/2)

Interest Expense = $2,450 ($70,000 * 3.5%)

Cash payment for interest = $2,450

No amortization of discounts or premiums

December 31:

Semiannual interest rate = 3.5% (7%/2)

Interest Expense = $2,450 ($70,000 * 3.5%)

Cash payment for interest = $2,450

No amortization of discounts or premiums

2. Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $70,000 for $63,948 on January 1, 2015. The market interest rate for bonds of similar risk and maturity is 8%. Interest is paid semiannually on June 30 and December 31.

a) Data and Calculations:

Face value of bonds = $70,000

Issuance value = $63,948

Bonds discounts = $6,052 ($70,000 - $63,948)

Interest rate on bonds = 7%

Market interest rate = 8%

Period of bonds = 15 years

Payment period = semiannually

Issue date = January 1, 2015

June 30, 2015:

Semiannual interest rate = 3.5% (7%/2)

Interest Expense = $2,557.92 ($63,948 * 4%)

Amortization of bonds discounts = $107.92 ($2,557.92 - $2,450)

Cash payment for interest = $2,450 ($70,000 * 3.5%)

December 31, 2015:

Semiannual interest rate = 3.5% (7%/2)

Interest Expense = $2,562.24 (($63,948 + 107.92) * 4%)

Amortization of bonds discounts = $112.24 ($2,562.24 - $2,450)

Cash payment for interest = $2,450 ($70,000 * 3.5%)

3. Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $70,000 for $76,860 on January 1, 2015. The market interest rate for bonds of similar risk and maturity is 6%. Interest is paid semiannually on June 30 and December 31.

a) Data and Calculations:

Face value of bonds = $70,000

Issuance value = $76,860

Bonds premium = $6,860 ($76,860 - $70,000)

Interest rate on bonds = 7%

Market interest rate = 6%

Period of bonds = 15 years

Payment period = semiannually

Issue date = January 1, 2015

June 30:

Semiannual interest rate = 3.5% (7%/2)

Cash payment for interest = $2,450 ($70,000 * 3.5%)

Interest Expense = $2,305.80 ($76,860 * 3%)

Amortization of bonds premium = $144.20 ($2,450 - $2,305.80)

December 31:

Semiannual interest rate = 3.5% (7%/2)

Cash payment for interest = $2,450 ($70,000 * 3.5%)

Interest Expense = $2,301.50 (($76,860 -144.20) * 3%)

Amortization of bonds premium = $148.50 ($2,450 - $2,301.50)

(Record bond issue and related semiannual interest)

3 0
3 years ago
Stock R has a beta of 1.8, Stock S has a beta of 0.75, the expected rate of return on an average stock is 9%, and the risk-free
PIT_PIT [208]

Answer:

Stock R more beta than Stock S = 4.2%

Explanation:

given data

Stock R beta = 1.8

Stock S beta = 0.75

expected rate of return = 9% = 0.09

risk-free rate = 5% = 0.05

solution

we get here Required Return

Required Return (Re) = risk-free rate + ( expected rate of return - risk-free rate ) beta  ...........1

Required Return (Re) = 0.05 + ( 0.09 - 0.05 ) B

Required Return (Re) =

so here

Stock R = 0.05 + ( 0.09 - 0.05 ) 1.8

Stock R = 0.122  = 12.2 %

and

Stock S = 0.05 + ( 0.09 - 0.05 ) 0.75

Stock S =  0.08 = 8%

so here more risky stock is R and here less risky stock is S

Stock R is more beta than the Stock S.

Stock R more beta Stock S =  12.2 % - 8%

Stock R more beta Stock S = 4.2%

4 0
3 years ago
Your grandfather put some money in an account for you on the day you were born. You are now years old and are allowed to withdra
sergij07 [2.7K]

Answer:

Missing word <em>"You are now 18 years old and are allowed to withdraw the money for the first time. The account currently has $3996 in it and pays an 8% interest rate."</em>

a.  At 18 years, future value of current amount (compounded for another 7 years at 8%)

= $3,996 * (1.08)^7

= $3,996 * 1.7138

= $6,848.34

b. At age 65, future value of this amount (compounded for another 40 years at 8%)

= $6,848.44 * (1.08)^40

= $6,848.44 * 21.7245

= $148,779.93

c. Future Value = Present Value * (1 + Interest Rate)^n

So, let initial the money deposited be represented by Y

=> $3,996 = Y * (1.08)^18

=> $3,996 = Y * 3.996

Y = $3,996 / 3.996

Y = $1,000

8 0
2 years ago
The statement of cash flows for Baldwin Company shows what happens in the Cash account during the year. It can be seen as a summ
Fynjy0 [20]

Answer:

d) It is a use of cash, and will be shown in the investing section as a subtraction.

Explanation:

The plant improvements will result in cash outflow and is to be considered as an investing activity and not financing activity. It is not a source of cash. So, this option is incorrect.

There will be cash outflows when a company makes plant improvements. It is reported under the investing activity and not under financing activity. So, this option is incorrect.

There will be cash usage when their plant improvements. It is not a source of cash which does not result in cash inflows. So, this option is incorrect.

6 0
3 years ago
A white man places a rental property he owns on craigslist to rent it out for the next year. he receives two very promising appl
julia-pushkina [17]
This is an example of racisim/ predjudice/colorisim or discriminatiom
4 0
3 years ago
Read 2 more answers
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