Question

On January​ 1, 2018, Earnest Company purchased equipment and signed a sixminusyear mortgage note for $ 110 comma 000 at 15​%. The note will be paid in equal annual installments of $ 29 comma 066​, beginning January​ 1, 2019. Calculate the portion of principal paid on the third installment.​ (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.) A. $ 29 comma 066 B. $ 12 comma 447 C. $ 16 comma 500 D. $ 16 comma 619

Answer 1

Answer:

D. $ 16 comma 619

Explanation:

Mortgage Installment is compromised of the interest and principal payment. The principal value is calculated by deducting the interest on opening balance of mortgage from installment of the year.

Mortgage Amortization schedule

Date                     Installment    Interest                  Principal    Balance

January​ 1, 2018                                                                         110,000

January​ 1, 2019   29,066    (110,000x15%) 16500   12,566     97,434

January​ 1, 2020  29,066    (97,434x15%) 14,615     14,451      82,983

January​ 1, 2021   29,066    (82,983x15%) 12,447    16,619      66,364