Calculation of monthly payment is as follows:AB1 Loan Amount2 Number of years3 Rate7,50,000.00306.25%4 Monthly payment5 Formula3 52,660.83ЕРMТ[В3, В2,-В1,1)Step 3 Calculation of interestexpense for years 1-5Calculation of interest expense for years 1-5 isas follows:AHLoan AmountNumber ol years7.50.000.0030ate4.25%4Monthly peymentPMTIRA/12.82. BL.OFormulaYearsMonthily payment imerest Pormula for mterestPrncipalrermula for prmepalLean salance$7.50,000.00T1.200.25 PMT|01/12.A.02.-01o) 21.102.01=PPMT(D/1249.02-DL.O $7.26.317.17 =Ga-D$7,03,554.10 G9 E10$6,80,149.56 -G10 E1$6,5,523.12 -aL1-E2S63294.15 -612-E13$6,0.200.01 G13-1427..003,78561PMT(83/12.A10,82-81,00 23,283 27810-CI93,664 34-PMT|83/12.A11,82-81,,00 23,40454-811-C1102113 27.068.812t27,066.133419.91-PMT(RI/12.A132,-81.,0) 21,64IL-813-CI32 27,0. z2,7.74 =PMIT|R2/12,A14R2,-81,.0) 221,772. 14R14-CI4141516 terest expese for years 1-517FormulaSUMICOCStep 4 Calculation of principalbalance at the year end 6Calculation of principal balance at the year-end 6 is as follows:Loan Amount2Number of years30Rate6.25%Moly paymentFormula4PUTB/12,02-B1,0)6Monthly paymen Interest rarmula for ntarestPrnapal romula for prinapalLoan BalancTears5750.000.006 1,06 25 -IPMI1/12,AS,2. 1,0 21.162.6 -POMIna/12A2, n.0 S72517.17 -GE57.01.154.10 -0s-1o1.27,0610S T1,64MIPMTO/12,01102-BL 0 z 2104.5 -311-C1,542AS -IPMIJa/12,A12,12, HL S26.44-121211127,06.12S455.423.12 l-G11 121327.0054.32.374.15 G12-13141,256.74IPMT0/12,414,02-BL0) t3.7a.34 -314-C141516 Lon belance at the end of year$6,09.202.01 2. A mortgage has the following terms:Amount:$750,000Rate:6.25%Amortization (Years):30Term (Years):20Please determine the following:A. What is the Monthly Payment?B. In preparing an Income Statement, what is the Interest Expense for years1-5?c. What is the Principal Balance at the end of year 6?D. What is the value of the loan at the expiration?E. If rates remain constant (flat), what would the benefit be to refinancethis loan after year 10?

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2. A mortgage has the following terms: Amount: $750,000 Rate: 6.25% Amortization (Years): 30 Term (Years): 20 Please determine the following: A. What is the Monthly Payment? B. In preparing an Income Statement, what is the Interest Expense for years 1-5? C What is the Principal Balance at the end of year 6?

2. A mortgage has the following terms: Amount: $750,000 Rate: 6.25% Amortization (Years): 30 Term (Years): 20 Please determine the following: A. What is the Monthly Payment? B. In preparing an Income Statement, what is the Interest Expense for years 1-5? C What is the Principal Balance at the end of year 6?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 7FPE: Calculating interest and APR of installment loan. Assuming that interest is the only finance charge,...

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