A loan of 879,000 is to be repaid in 30 years by month-end repayments starting in one month. The interest rate is 5.6% p.a. compounded monthly. Calculate the interest paid in Year 5.
A loan of 879,000 is to be repaid in 30 years by month-end repayments starting in one month. The interest rate is 5.6% p.a. compounded monthly. Calculate the interest paid in Year 5.
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 12EA: Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank...
Related questions
Question
Give typing answer with explanation and conclusion
A loan of 879,000 is to be repaid in 30 years by month-end repayments starting in one month. The interest rate is 5.6% p.a. compounded monthly. Calculate the interest paid in Year 5. (between the end of month 48 and the end of month 60). Correct your answer to the nearest cent without any units. (Do not use "$" or "," in your answer. e.g. 12345.67) (Hint: you can use Excel to find the answer.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step 1: Given information:
VIEWStep 2: Calculate the monthly payment as follows:
VIEWStep 3: Calculate the loan remaining balance after 4 years as follows:
VIEWStep 4: Calculate the loan remaining balance after 5 years as follows:
VIEWStep 5: Calculate the reduction in principal amount as follows:
VIEWStep 6: Calculate the total monthly payments in year 5 as follows:
VIEWStep 7: Calculate the interest paid for year 5 as follows:
VIEWSolution
VIEW
Step by step
Solved in 8 steps with 4 images
Knowledge Booster
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.Recommended textbooks for you
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning