1 A design studio received a loan of $7,800 at 6.10% compounded semi-annually topurchase a camera. If they settled the loan in 2 years by making quarterly payments,construct the amortization schedule for the loan and answer the following questions:a. What was the payment size?Round to the nearest centb. What was the size of the interest portion on the first payment?Round to the nearest cent b. What was the size of the interest portion on the first payment?Round to the nearest centc. What was the balance of the loan at end of the first year?Round to the nearest centd. What was the size of the interest portion on the last payment?Round to the nearest cent

Given, The loan amount is $7,800 Interest rate is 6.10% compounded semi annually. Term of loan is 2…

A design studio received a loan of $7,800 at 6.10% compounded semi-annually to purchase a camera. If they settled the loan in 2 years by making quarterly payments, construct the amortization schedule for the loan and answer the following questions: a. What was the payment size?

A design studio received a loan of $7,800 at 6.10% compounded semi-annually to purchase a camera. If they settled the loan in 2 years by making quarterly payments, construct the amortization schedule for the loan and answer the following questions: a. What was the payment size?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

See similar textbooks

Related questions

Q: AXN Sdn Bhd needs to raise RM1, 000,000 in short-term loan for five months. loan from OCBC bank at…

A: Here, Borrowed funds = RM 1,000,000 Time period = 5 months Interest rate = 12% Compensating balance…

Q: All rates in this question use semi-annual compounding. You observe a two year spot rate of 6.00%,…

A: Pure Expectation theory of interest rate states that the return of holding two year bond is the same…

Q: Your firm has semi-annual floating rate payment obligations for the next two years computed on a…

A: Swaps: Swaps are a type of derivative contract where one party receives a floating interest rate and…

Q: What is the net present value of this project?

A: Information Provided: Fixed cost = $157,000 Annual sales = $98,000 Variable cost = $27,400 Fixed…

Q: Market risk cannot be eliminated. OA. True OB. False

A: The financial market can be defined as the market place which includes the trading of securities and…

Q: company borrowed P45,200 from a savings and loan association that charges 14% converted quarterly.…

A: Loan are paid by the equal periodic payments that carry the payment for interest payment and also…

Q: You are looking to purchase Company A. Your projections for the EBITDA of Company A are as Follows:…

A: Value of a company Based on EBITDA and EBITDA multiple, the value of firm or enterprise is…

Q: Colossus Company has the ability to obtain debt financing at 10 percent. It currently has $2,000,000…

A: The cost of debt will be reduced from the profit before calculation of tax on income, which means…

Q: What is most we should pay for a share of preferred stock that pays an annual dividend of $1.8 per…

A: In case of perpetual stock we should pay for a share of preferred stock that pays an annual dividend…

Q: d. Estimate the cost of equity raised by issuing new shares using the dividend growth method. e.…

A: The cost of equity: The required return on an equity stock by its equity shareholders is the cost of…

Q: . Explain the factors that determine beta and how n asset beta can differ from equity betas.

A: Beta - It measures the responsiveness of a stock's prices to changes in the overall stock market.…

Q: Your investment club has only two stocks in its portfolio. $50,000 is invested in a stock with a…

A: The portfolio beta represents the beta of the whole portfolio. the portfolio beta is the sum of the…

Q: Five years ago you borrowed $200,000 to finance the purchase of a $240,000 house. The interest rate…

A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: Taxes and WACC [LO3] Sixx AM Manufacturing has a target debt-equity ratio of 0.65. Its cost of…

A: WACC formula :- debt* cost of debt *(1-tax %) + equity* cost of equity. Or WACC = D*kd*(1-t%) + E*ke

Q: Required Rate of Return AA Corporation's stock has a beta of 0.6. The risk-free rate is 3%, and…

A: To calculate the required return we will use the below formula Required rate of return = Risk free…

Q: Konawalski's Kustom Erdapfel Chips, Inc., is the maker of gourmet German-style potato chips. The…

A: Stock Price The price at which a share of stock is currently trading on the market is referred to as…

Q: A put option that expires in six months with an exercise price of $45 sells for $4.25. The stock is…

A: Put call parity represents the relationship between the price of a European call option and the…

Q: The project's NPV? WACC: 10.00% Year 0 1 2 3 Cash flows -$1,000 $450…

A: The NPV is based on discounted cash flows. The NPV provides the information of net cash flows…

Q: What is the discount rate at which the following cash flows have a NPV of $0? Answer in %, rounding…

A: Internal Rate of Return: It is the rate used in capital budgeting that makes the project's net…

Q: An investment firm A pays 6.5% interest per annum, compounded on a quarterly basis. To remain…

A: Firm A pays 6.5% of interest per annum with compounded on quarterly basis. Here 6.5% pa.a is nominal…

Q: Can you estimate the annual rate of return to grow $5,000 to $20 million in 51 years? Show cash…

A: The following information is provided.FV = 20,000,000PV = 5000n = 51 years Annual rate of return can…

Q: Mrs Galicia gave her sisters $3000 each to invest. The investment will last 8 years. The table shows…

A: Future Value: It shows the future value of the present amount of investment. It is estimated by…

Q: You plan to place $1,200 per year into a Roth IRA. You expect to earn 6% APR and you will place this…

A: Given, The yearly deposit is $1,200 Rate is 6% Term of investment is 35

Q: Inflation is a general rise in market prices that affects all goods equally. OA. True OB. False

A: Market prices refer to the prices that are prevailing in the market of goods and services. It is…

Q: The owner of a building that costs $100,000 who wishes to determine the annual rent necessary to…

A: Given: Present value =$100,000 Return = 10% Years =10

Q: Caspian Sea Drinks is considering the purchase of a new water filtration system produced by Rube…

A: The discount rate where the project’s return is equal to the initial investment is called the…

Q: What is the value today of a money machine that will pay $4,016.00 every six months for 23.00 years?…

A: Value of machine would be present value of payments to be received in future based on interest rate…

Q: Suppose rRF = 3%, rM = 8%, and rA = 7%. Calculate Stock A's beta. Round your answer to one…

A: We will use the CAPM model here. CAPM is the capital asset pricing model. This model describes the…

Q: Today, a firm has a stock price of $14.26 and an EPS of $1.15. Its close competitor has an EPS of…

A: The method of comparables is used to find the equity value of a company by equating its ratios to…

Q: Given the following income statement data, calculate net income: sales=$2500, cost of goods…

A: To calculate the net income we will use the below formula Net income = [Sales-Cost of goods…

Q: A project with a life of 6 years is expected to provide annual sales of $380,000 and costs of…

A: Given: Particulars Base case Sales $380,000.00 Cost $269,000.00 Tax rate =21%

Q: Agency costs are _______ costs that are paid to ____ acting on behalf of the principal to minimise…

A: Agency cost are all such cost which will be incurred in order to lower down the conflict of interest…

Q: how much must you repay at the end of the 6 months?

A: Information Provided: Amount borrowed = $500 Interest rate = 6% Time = 6 months or 0.5 year…

Q: The maintenance on a machine is expected to be P3,500, P7,000, P10,500, and P14,000 for the second,…

A: We will have to use the concept of time value of money which states that worth of money changes with…

Q: Oil Drilling company is considering the installation of new automated drilling equipment. The new…

A: Capital Budgeting Capital budgeting and investment appraisal are planning processes used to assess…

Q: Here is a table of call option quotes on Nike (NKE) from CBOT on 2 March 2020 On that day NKE traded…

A: The Bid and Ask prices: The bid price is the price at which a market maker is willing to purchase a…

Q: The financing will be used for purchasing business raw materials, payment for water and electrical…

A: The expenses that cover the day today expenses and current assets of the entity are referred to as…

Q: Based on the rule of 72, what per annum interest rate must Oprah earn on her savings of $50 million…

A: Rule of 72 is one of the important rule or calculation used in finance. This helps in estimating…

Q: China has a fixed rate regime. They keep their currency in terms of trade, fixed against the US…

A: Economy refers to the state or country in which the production of goods or services is to be done.…

Q: A joint former cost $55,000 to purchase and $105,000 to install seven years ago. The market value…

A: It is given that, Purchase value - $ 55,000 Installation charges - $105,000 Market value - $34000…

Q: Debt is riskier than equity, and therefore only higher returns on debt are required in order to…

A: Company requires funding for their investment which can be obtained from broadly two sources.…

Q: Zefer Ltd. has faced extreme financial difficulties over the course of the past decade, however, the…

A: Total Market Value = No.of Shares Already Issued * Market Value of Share = 1,000,000,000 * 90…

Q: Question 12 Suppose you are choosing between investing in a stock investment and a project, both…

A: Cash money has many alternatives and it has many potential investments opportunities where return on…

Q: dividends speak louder than words when it comes to conveying information about management’s…

A: In the stock markets sending signals to the market is very important if you send proper signal than…

Q: Perform an after-tax cash flow analysis on the following data on the replacement of an old equipment…

A: The after-tax NPV analysis is used to find out the actual value of the project while using the…

Q: What is the present value of $30,000 you will receive 7 years in the future, ass

A: The present value is equivalent value of money to be received today that will be equal to money to…

Q: The Millers would like to have a $30,000 education fund for their son Vincent, who is now three…

A: Present Value refers to the discounted value of a single cash flow or multiple cash flows today…

Q: Financial analysis is very important factor for a successful project, discuss its strength and…

Q: Let’s pretend that we buy an annuity at the age of 70 with how much money we have in total from our…

A: Given: Value of the annuity “P” = $1368506.12 Interest rate = 5% Per month rate “r” = 5%/12 Number…

Q: The Herfindahl concentration index for a country is highly correlated with the weight its largest…

A: Herfindahl–Hirschman Index or HHI is referred as an index, which is accepted measure that…

Question

A design studio received a loan of $7,800 at 6.10% compounded semi-annually to
purchase a camera. If they settled the loan in 2 years by making quarterly payments,
construct the amortization schedule for the loan and answer the following questions:
a. What was the payment size?
Round to the nearest cent
b. What was the size of the interest portion on the first payment?
Round to the nearest cent

b. What was the size of the interest portion on the first payment?
Round to the nearest cent
c. What was the balance of the loan at end of the first year?
Round to the nearest cent
d. What was the size of the interest portion on the last payment?
Round to the nearest cent

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Financial Reporting in Hyperinflationary Economies

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Using the information provided, what transaction represents the best application of the present value of an annuity due of $1? A. Falcon Products leases an office building for 8 years with annual lease payments of $100,000 to be made at the beginning of each year. B. Compass, Inc., signs a note of $32,000, which requires the company to pay back the principal plus interest in four years. C. Bahwat Company plans to deposit a lump sum of $100.000 for the construction of a solar farm In 4 years. D. NYC Industries leases a car for 4 yearly annual lease payments of $12,000, where payments are made at the end of each year.
Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank in the amount of $500,000. The terms of the loan are 2.9% annual interest rate and payable in 8 months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on October 20, and the entry for payment of the short-term note and final interest payment on May 20. Round to the nearest cent if required.
Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the end of four months? A. $2,600 B. $7,800 C. $137,800 D. $132,600
Electro Corporation bought a new machine and agreed to pay for it in equal annual installments of 5,000 at the end of each of the next 5 years. Assume a prevailing interest rate of 15%. The present value of an ordinary annuity of 1 at 15% for 5 periods is 3.35. The future amount of an ordinary annuity of 1 at 15% for 5 periods is 6.74. The present value of 1 at 15% for 5 periods is 0.5. How much should Electro record as the cost of the machine? a. 12,500 b. 16,750 c. 25,000 d. 33,700
Pickles R Us is a pickle farm located in the Northeast. The following transactions take place: A. On November 6, Pickles borrows $820,000 from a bank to cover the initial cost of expansion. Terms of the loan are payment due in six months from November 6, and annual interest rate of 3%. B. On December 12, Pickles borrows an additional $200,000 with payment due in three months from December 12, and an annual interest rate of 10%. C. Pickles pays its accounts in full on March 12, for the December 12 loan, and on May 6 for the November 6 loan. Record the journal entries to recognize the initial borrowings, and the two payments for Pickles.
Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the year
Halep Inc. borrowed $30,000 from Davis Bank and signed a 4-year note payable stating the interest rate was 4% compounded annually. Halep Inc. will make payments of $8,264.70 at the end of each year. Prepare an amortization table showing the principal and interest in each payment.
Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?
Sharapovich Inc. borrowed $50,000 from Kerber Bank and signed a 5-year note payable stating the interest rate was 5% compounded annually. Sharapovich Inc. will make payments of $11,548.74 at the end of each year. Prepare an amortization table showing the principal and interest in each payment.
Whole Leaves wants to upgrade their equipment, and on January 24 the company takes out a loan from the bank in the amount of $310,000. The terms of the loan are 6.5% annual interest rate, payable in three months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on February 24, and the entry for payment of the short-term note and final interest payment on April 24. Round to the nearest cent if required.